Move pressures Japan to open up farm sector

Four TPP members offer to kill all tariffs

Kyodo

Four of the countries negotiating the Trans-Pacific Partnership initiative are offering the other members total tariff elimination on all agricultural and industrial goods, a source close to the talks said.

The move by Australia, New Zealand, Singapore and Chile is likely to put pressure on Japan, the second-largest of the 12 TPP economies, to open up its politically sensitive agricultural market, the source said Friday.

The other members of the free trade talks were expected to reveal their offers later Saturday, the fourth and final day of the lead negotiators’ meeting in Washington, the source said.

This could see Tokyo and Washington, which have only conducted bilateral negotiations since Japan’s belated entry into the TPP talks in July, join the multilateral-level tariff negotiations Saturday.

The chief negotiators from the 12 Pacific Rim countries are preparing for a special leaders’ summit on the U.S.-led pact next month in Bali, Indonesia, and want to strike a deal by the end of the year.

“The Washington meeting will try to close chapters that are easier to resolve. After that, deadlines will be given for chapters such as market access or rules of origin,” said an official from one of the TPP countries.

Another official said the lead negotiators dealt mainly with a dispute settlement mechanism on the first day and with labor issues on the second.

The 12 TPP members hope to forge at least a basic accord during the Bali summit for creating what would be one of the world’s largest free trade zones, accounting for around a third of global trade.

The chief negotiators’ meeting has run in parallel with a working group session on “market access,” which basically discussed tariff elimination for goods.

For Japan, which joined the talks in late July but didn’t take part in the tariff negotiations until last month’s round in Brunei, the sessions in Washington were expected to provide further chances for Tokyo to retain tariffs on sensitive farm products, Japanese officials said.

Tokyo is facing strong domestic pressure to protect sugar, rice, wheat, beef and pork, dairy and other farm products because farmers fear that an influx of cheap imports will devastate the nation’s agricultural sector.

Japan has exchanged lists of tariff-elimination items with Brunei, New Zealand, Malaysia, Mexico, Peru and Singapore so far, but the percentage of tariff-free items on its list remains relatively low at around 80 percent.

The goal of the TPP accord, in theory, is to get rid of all tariffs.

  • zer0_0zor0

    Aside from the fact that it is imperative that Japan protect the wet-paddy rice farmers at all costs, there are other salient facts that clearly indicate that opening the agriculture sector is not only not desirable but would be dangerous.

    Japan has a much higher population density–by far–than any of the other countries party to the negotiations. And since food self-sufficiency is already dangerously low (the lowest among TPP nations?) among the nations party to the negotiations, Japan can hardly afford to sign on to a treaty that would further erode its capacity to produce agricultural products.

    • Mark Garrett

      Please explain how this would in any way “erode its (Japan’s) capacity to produce agricultural products”? I didn’t realize that an end result of TPP was giving away arable land.

      I don’t understand how people can make the leap from increased competition to diminished capacity. The two just aren’t the same. The only immediate effect will be the reduced retail markup on foreign and domestic produce which is a win for everyone living in Japan who is not a farmer (about 97% of the population).

      • YoDude12

        …and elimination of the multiplicity of middle-men who are responsible for marking up the price of ag. goods throughout the process of getting the products to the retail level, all the while contributing nothing to the value.

      • zer0_0zor0

        What “multiplicity of middle-men”?

        The only product with a distribution network to the retail level is rice.

        I shop at supermarkets, local grocers, etc., and would be surprised if there were some shadowy network of middlemen lurking behind the scenes.

      • Mark Garrett

        Can you really be this naive??

      • zer0_0zor0

        Facts are preferable to innuendo. ;- |/
        Here’s a piece specifically on rice and international trade.

        http://www1.american.edu/TED/haitirice.htm#endnote11

      • Mark Garrett

        Really?? Are you seriously going to use Haiti as your best defense? You’re doing more to hurt your point than I am!

      • zer0_0zor0

        The situation is analagous, maybe even worse for Japan because the prices of rice are much higher than they were in Haiti, but the Hatian farmers still couldn’t compete.

        You’ll note that some accused the USA of “dumping” its rice on Haiti, and it would probably merit a WTO complaint nowadays.

      • Mark Garrett

        There is absolutely nothing analogous between Japan and Haiti. Not geographically, Not demographically. Not economically. Not culturally. Nothing.

      • RiceDealer

        I’ve personally worked as a middle man for rice. We put a LOT of effort into marketing our product as some kind of special, artisan niche product, when, in reality, it was just…rice. I can’t speak to other rice products, but we marked the price up on the rice to ridiculous levels, and it was completely arbitrary – there was no reference whatsoever to market prices, no market research. We just slapped a price on it and called it a day.

        But I also know full well how Japanese rice farmers like to puff their chests and brag about how special their rice is compared to everyone else. Hell, they had major competitions to see whose was the best! Ours won every year! It reminded me terribly of Plato’s cave, you know? It all tastes the same. It’s rice. But everyone sits around going on and about how THIS rice is special, THIS rice is different, oh, look how GREAT Japan’s skill is, look how AMAZING we are. Frankly, the tariffs wouldn’t be necessary if the rice producers weren’t so full of themselves and would just sell their damn rice.

      • zer0_0zor0

        “Uonuma” from Niigata?

        If your rice won the contest, then there must be some distinguishing characteristics to the discerning palate that earn it such an honor.

        To say that it all tastes the same is sort of contradictory to that state of affairs.

        Aside from rice you eat, there are rices that make distinctively different tasting Japanese sake, too, with “Yamadanishiki” being the most well known.

        At any rate, taste is only a small part of the reason for keeping the tariffs: preservation of the landscape is far more important, and food self-sufficiency is probably the most often cited reason.

      • RiceDealer

        No, not uononuma from Niigata.

        “To say that it all tastes the same is sort of contradictory to that state of affairs.”

        Um, not if the award itself is arbitrary nonsense. That’s a basic post-hoc fallacy. “It won an award, so it must be delicious.”

        Look, I live with a rice farming family. You may not realize this, but they have a huge emotional investment in the idea that rice is somehow something that sets them apart racially, ethnically. Their belief in their racial superiority is tied up with their “superior” rice. My stepkids come from a rice farming family, and do you know how hard it is to explain to them that, no, actually, there is nothing special about their mouths that makes them like rice? They literally believe that there is some kind of biological imperative for them to eat rice that is racially unique to them. I honestly have NO IDEA where they learn this idiotic garbage.

        So, there is a LOT of cultural baggage tied in with rice, and I’m 100% unapologetic in my cynicism towards it after having lived and worked with these people.

        And, look: I’m not saying rice varieties DON’T taste different. I’m sure they do. But I’m 100% positive that the subtleties that Japanese people rant about are mostly trumped-up arbitrary, post-hoc nonsense. It’s all just basic confirmation bias with a sprinkling of racism.

        I mean, seriously, do you know how we marketed our rice? We told people we used water from a special river. Oh, wow, a special river! I asked our guys if we could sell our rice as “organic,” they said, “No. The river is full of pesticide runoff from other farmers, so we can’t call this organic.”

        So…wait. There’s nothing special about the river whatsoever? It’s not clean and pure and perfect and magical? It’s full of chemicals? But that’s the ENTIRE marketing ploy for the rice! The water is special! And people BOUGHT it.

        So, whatever. That’s my experience. I don’t believe a damn thing anyone says about rice, and I roll my eyes at my wife when she says that the new, expensive rice she spent all our money on is “so much better” even though it tastes like cardboard. The rice tariffs absolutely need to go overnight, and if the economy collapses because a bunch of rice farmers have to actually earn their own money for the first time in their lives…hey, I’m fine with that.

      • Mark Garrett

        Thank you for such an honest assessment from the inside.
        When I tell people that I think farms in Japan should sink or swim based on their merit and not be propped up by spin doctors and subsidies they immediately think I’m anti-farmer. Nothing could be further from the truth.

        I was born and raised on a farm and have the utmost respect for the hard work it takes to run one. My grandfather didn’t take a single day off from milking his stock for over 10 years. That’s 24/7/365 for more than 10 years. He made very little profit and what he did he invested immediately back into the farm. The truth is though that today farming is much different than it was 100 years ago. There’s an expression in business, “adapt or die” and it applies here just as much as it does to the corner video rental store.

        As you stated so well, there just isn’t a big difference in rices, at least not to the average consumer, especially those on a tight budget, which is most of us these days. Dry grains can be stored for long periods of time which makes them excellent goods for export. Japanese farmers should be rethinking their land use instead of hoping for government bailouts. There are many highly profitable crops that could be grown here instead and at a fraction of the labor and cost.

      • zer0_0zor0

        Japanese farmers

        should be rethink their land use

        because you say so?

      • zer0_0zor0

        I find it somewhat incongruous that someone connected to distributing Japanese rice in Japan and married into a rice farming family would be advocating opening the market.

        The rationale you have provided is apparently based on an attempt to paint the Japanese as a group of irrational and superstitious rice fanatics, and therefore they don’t deserve consideration for their 2,00 year-old wet-paddy landscape and food self-sufficiency, let alone dietary preferences.

        Instead of responding to any of the more salient issues, you try to divert the discussion into marketing schemes, which seems somewhat dubious.

      • RiceDealer

        “The rationale you have provided is apparently based on an attempt to paint the Japanese as a group of irrational and superstitious rice fanatics, and therefore they don’t deserve consideration for their 2,00 year-old wet-paddy landscape and food self-sufficiency, let alone dietary preferences.”

        I explained my vitriol toward rice farmers in a comment that might not get through moderation (for vitriol).

        Tl:dr version is that my STEPSONS are from a rice farming family and that family refuses to have anything to do with them, let alone provide them any financial support whatsoever, despite the fact that they are rolling in money from government subsidies. I am absolutely 100% biased here, but I also have a perspective on the culture many others do not. Take me at my word or ignore me. I don’t claim to be objective.

        As for painting the Japanese as superstitious, irrational rice fanatics…um…yep. That’s my experience with it. Sorry if you don’t like it. I didn’t say it’s objectively true of all Japanese people. It’s my experience with my family and coworkers.

        And it’s not just their “dietary preferences.” My stepsons received a racial myth of uniqueness or even superiority from their family, which I have no reason whatsoever to accept or even tolerate within my household. I don’t give a damn what their “dietary preferences” are when I’m the one paying the bill.

        And 2,000 year history of farming rice? Yes, and? I’m sure the rest of Asia’s been doing it longer. 2,000 years of history doesn’t justify racial myths and other nonsense.

      • zer0_0zor0

        Capacity and arable land are not the equivalents here, it is the ability to compete against American agribusinesses economies of scale, and countries like New Zealand (a country I like) where there are more sheep than people (much lower population density than Japan), so the producers in such countries would have an inherent advantage over Japanese farmers with respect to cost to market, etc. economics.

        There is a noted problem in Japan of people leaving the countryside and moving to the city, so the weakening economic incentives of the agricultural sector would only exacerbate that problem.

        All of the above equate to an end result of a deterioration of the economics variables that encourage farmers in the first place. If farmers don’t farm then the capacity to produce is eroded due to a lack of people willing to farm, not because of a lack of arable land.

        Rice will be protected, so there should be no danger to the 2,000+ year old wet-paddy landscape.

        But other products must also be protected to prevent something like widespread deflation from occurring in the markets for agricultural goods, which would put farmers out of business and further reduce Japan’s self-sufficiency in food production.

      • Mark Garrett

        It’s really not worth getting into a deep discussion with you over this because you obviously have very little understanding of how the system works here. Children of farmers are moving to the city because they can earn a much better living there. You seem to think that the subsidies and incentives issued by the government to “protect” the industry are going in the farmers pockets. They’re not. They’re going into the coffers of JA, lobbyists, and politicians.

        Why do you assume that Japan cannot compete with the U.S.? Is the cost of seed that much higher here? The cost of water? Do you have a clue as to what shipping costs are from California to Japan? The reason is that for every farmer who toils his land there are a dozen stuffed shirts taking advantage of their hard work.

        If you do just a little bit of research you will see that there is a new generation of farmers who are breaking the mold and cutting out all of the middle men and red tape. They’re using modern techniques to produce a product that they can proudly put the “Made in Japan” label on and are charging (and getting) a premium price.

        And while you’re looking that up you might want to check the definition of capacity too. Regardless of how the number of farmers fluctuates, the capacity does not change. Does the capacity of a gas tank change depending on how much fuel is in it?

      • zer0_0zor0

        Well, I don’t doubt that there’s room for
        reform, but maybe you’d care to provide a couple of links to articles or other informational sources supporting your assertions.

        Here are a few related online sources:
        http://www.tokyofoundation.org/en/articles/2011/farming-survive-liberalization

        http://www.nytimes.com/2007/08/02/business/worldbusiness/02farm.html?_r=0

        http://www.commondreams.org/views02/0506-09.htm

      • Mark Garrett

        Thanks for the links. Did you bother to actually read them? LOL! The first two support my position almost 100% and the third one has absolutely nothing to do with this topic. Congrats!

        Here’s a quote from the second regarding New Zealand which sums it up nicely I think:

        “…ever since a liberal but free-market government swept to power in 1984 and essentially canceled handouts to farmers agriculture here has never been the same. The farming community was devastated — but not for long. Today, agriculture remains the lifeblood of New Zealand’s economy. There are still more sheep and cows here than people, their meat, milk and wool providing the country with its biggest source of export earnings. Most farms are still owned by families, but their incomes have recovered and output has soared.”

        The “farming community” in Japan that best relates to that which is referred to in the beginning of the quote is all of the blood-sucking stuffed shirts who have been profiting off the agricultural sector here since post WWII. The closest thing they’ve ever had to a shovel in their manicured hands is a silver spoon.

        What you fail to comprehend is that Japan’s agriculture industry is failing even with the government’s help. That’s because it’s a system that is antiquated and holds no interest for young people today. Removing subsidies and allowing free market enterprise to drive modernization and innovation will be what saves it.
        Check out this link to see some of what’s already going on here.
        http://www.youtube.com/watch?v=rsyTL0AZ4t0

      • zer0_0zor0

        Your spin on those articles is somewhat disingenuous.

        The comparison to make New Zealand is the USA, first and foremost, which was the purpose of the 2nd and 3rd links.

        Japan has a much more specific and narrow set of circumstances that confine its ability to reduce tariffs on sensitive products. It would be completely irrational for Japan to open up its rice market, for example.

        One thing you fail to comprehend is that wet-paddy rice farming is a labor intensive task that has limitations with respect to the introduction of technology to modernize the “antiquated” system.

        In the USA there is a movement against agribusiness and back to family farming in some areas, so it is interesting to here your rationale for Japan to further open up the Japanese market to agribusiness.

        Incidentally, you will have noted from the following passage from the article of the first link that Japan already imports about half of the agricultural products it consumes. And if you consider that the prices of agricultural products in Japan are 56% higher (OECD figure) than elsewhere, the fact that rice is probably 300% higher likely accounts for a substantial percentage of that.

        As of 2007 the value of gross agricultural production in Japan…was 5.3 trillion yen. Agricultural imports were valued at 4.8 trillion yen, while the agriculture, forestry, and fisheries budget (the bulk of which goes to the farm sector) was 2.3 trillion yen. Revenues from agricultural tariffs totaled approximately 500 billion yen.

        According to figures published by the Organization for Economic Cooperation and Development, prices of farm produce in Japan are 56% higher than the world average. On the basis of the foregoing figures, Japan’s food self-sufficiency by value (domestic production divided by the sum of domestic production and import volume) is approximately 50%. (The more commonly cited rate of 40% is calculated on the basis of calories.)

  • Ron NJ

    “Tokyo is facing strong domestic pressure to protect sugar, rice,
    wheat, beef and pork, dairy and other farm products because farmers fear
    that an influx of cheap imports will devastate the nation’s
    agricultural sector.”
    If by ‘cheap’ you mean ‘not marked up to a ridiculous and unjustifiable degree’ then yes.

    • Mark Garrett

      It SHOULD read… “Tokyo is facing strong domestic pressure from JA, agricultural lobbyists and crooked politicians to protect sugar, rice, wheat, beef and pork, dairy and other farm products because the aforementioned fear that an influx of cheap imports will devastate their golden parachutes.”

  • Ken5745

    “The 12 TPP members hope to forge at least a basic accord during the Bali summit for creating what would be one of the world’s largest free trade zones, accounting for around a third of global trade.’

    The problem with this claim is that there are already holes in the nascent TPP because many of its members already have signed FTAs with China, the second largest economy in the world and will be the biggest by 2021.

    And Australia is knocking desperately on China’s doors to sign a FTA with China too when she saw that NZ managed to beat her to the post.

    And why leave out the 2nd biggest economy in the world and why the TPP is being led by the biggest debtor in the Universe are also mysteries of biblical proportions.

    That is why I call the TPP, The Puppets’ Paradox.

    And Japan is silly to join the TPP because its agricultural sector will be eviscerated by the larger farms in the US, Canada, NZ and Australia.

    The best option for Japan is to join the trilateral FTA with China and South Korea, to counter-balance the EU and NAFTA blocks.