Australia trade deal offers Japan leverage in TPP

by Kyoko Hasegawa

AFP-JIJI

Shinzo Abe’s success in signing a free trade deal with Australia proves Japan’s prime minister can bend the once-powerful farm sector to his will, experts say, offering leverage against U.S. claims of intransigence in a wider pan-Pacific deal.

Tokyo looks set to make the most of its triumph, which came just weeks before U.S. President Barack Obama arrives in Japan on a state visit that had at one point been expected to crown the Trans-Pacific Partnership (TPP).

The Japan-Australia deal was signed Monday after Abe’s summit with Prime Minister Tony Abbott, and followed seven years of sometimes torturous negotiations.

The agreement will see Australia drop its 5 percent duty on small and mid-sized Japanese cars — something of a symbolic move for a country that is soon to lose the last of its auto plants.

In exchange, Canberra has partially prized open Japan’s tightly-controlled agricultural markets, winning an up-to-50 percent cut in steep tariffs on imported Australian beef.

The deal “puts pressure on the United States over deadlocked talks with Japan” that form a key plank of the TPP project, said Takaaki Asano, research fellow at the Tokyo Foundation.

At issue is what Washington and many of the other parties to the talks — which also involve Chile, Mexico, Canada and several Asian countries — see as Japan’s unwillingness to open its lucrative agricultural market.

Putative suitors have long complained that sky-high tariffs — on rice it is nearly 800 percent — and nontariff barriers, like overly-strict safety requirements, are naked protectionism pandering to a powerful farming sector.

Japan’s farmers — largely elderly, conservative and with smallholdings that would barely be worth tilling in many countries — have traditionally been a formidable political force.

Through large and well-organized cooperatives they have backstopped Abe’s Liberal Democratic Party, helping it to maintain a virtual stranglehold on Japanese politics since the mid-1950s.

The narrative these cooperatives spin intimately links Japanese national identity with the shape of the countryside, idealizing the small rice paddies that make up the rural landscape and warning this essence of Japanese-ness is under threat from an onslaught of poor-quality, unsafe farm imports.

Abe’s triumph in the Australian deal has been to prove that he is prepared to take on this entrenched ideology and offer up his beef farmers, pitting them against the vast ranches of the Outback, whose economies of scale dwarf their Japanese competitors.

The Yomiuri Shimbun reported that Abe had told his ministers that he definitely wanted a trade deal struck during Abbott’s visit, regardless of protests from the farming lobby.

But the trick, says Waseda University professor Shujiro Urata, is that Tokyo has not given away very much. “The compromise Japan made this time is not huge,” he said. Commentators have noted that the full roll-back of beef tariffs to the headline level will take almost two decades.

But nevertheless, it was a compromise, and it undermines U.S. complaints that Tokyo is not prepared to budge.

“The ball is now in Washington’s court. They must be thinking hard now,” said Urata.

  • zer0_0zor0

    Funny thing is that I support the “narrative” of preserving the wet-paddy landscape credited to the mom & pop’s family farms in this article, but I don’t support either of the two “leaders” in the photo.

    So long as it stops the myopic TPP from being pushed through, what can you say? They may have ulterior political motives, but the world is a mess cascading in a downward spiral, so anything that offers even a modicum of amelioration of deteriorating conditions in the environment is welcome.

  • Demosthenes

    An eight hundred percent tariff on rice!?! Thaf is absolutely outrageous. Time for Japanese farmers’ cartel to get stomped on – remove the tariffs, import rice from Thailand or other parts of Asia, and pass on the savings to Japanese families. Put the farming land to better use for emerging energies, factories or home constructions – and if the farmers complain, well they’ll just need to adapt or die like everyone else. What an insult that a small group of crabby old men can dictate the market like this. Hardworking Japanese families and businesses are suffering just to prop up the farcical antics of these miserable old has-beens.