If the world’s poorest countries harbor high expectations about any fresh trade concessions from industrialized countries at a key international conference in May, Japan will probably turn out to be a real letdown.
Kofi Annan, the United Nations secretary general, sent letters to Prime Minister Yoshiro Mori and leaders of the other major industrialized countries recently, asking them to take the political leadership in opening their markets further to imports from the world’s poorest countries.
In the letters, which came ahead of the third U.N. Conference on the Least Developed Countries, to be held in Brussels for one week starting May 14, Annan specifically asked the industrialized countries’ leaders to do away with tariffs and quotas on more of their imports from LDCs.
The New York-based world body has so far sponsored similar conferences twice in Paris — in 1981 and 1990.
Japan is unlikely to be able to live up to the expectations of the U.N. — and probably to those of the world’s poorest countries. There are several reasons:
* Strong political leadership cannot be expected from the embattled Mori, who is expected to formally announce early next month a decision to step down and make room for the winner of the ruling Liberal Democratic Party’s presidential election, expected around the middle of next month. Mori concurrently serves as LDP president, which in Japanese politics is a prerequisite to becoming prime minister.
* The LDP will certainly reject any further opening of the agriculture sector, which would alienate domestic farmers, traditional LDP supporters, ahead of Upper House elections this summer.
* Government ministries, led by the Ministry of Agriculture, Forestry and Fisheries, are waiting until a new round of global trade liberalization negotiations is inaugurated before considering whether to further liberalize agricultural markets.
“Since it is almost impossible for Japan to announce any new trade concession at the forthcoming U.N. conference, we have no choice but to try and weather a possible storm of criticism there by trumpeting our contributions to the economic development of LDCs as the world’s largest aid donor,” one government official said, requesting anonymity.
The success of the forthcoming U.N. conference in Brussels may be the key to breaking a stalemate in international efforts to get a new round of global trade liberalization negotiations launched under the auspices of the World Trade Organization, the Geneva-based body that regulates international commerce.
Many developing countries are either opposed to or reluctant about launching the new round, because they fear that further trade liberalization would only benefit the industrialized camp at the expense of their interests.
The new round was originally to have been inaugurated at a WTO ministerial meeting in Seattle in December 1999. But that meeting of some 140 WTO member economies collapsed due to sharp differences over agriculture, antidumping and labor protection.
The WTO will hold a ministerial meeting again in Qatar in November to try and launch the new round.
In a concession aimed at alleviating the reluctance of developing countries, Japan decided in December to expand its preferential import-tariff system for LDCs on industrial products, beginning next month.
The numbers of both product items and countries covered by the preferential tariff scheme were raised. Japan will import a total of 6,972 items, an increase of 352, tax-free from all 48 LDCs, up 6 countries.
The Ministry of Economy, Trade and Industry boasts of the concession, insisting that it will make 99 percent of industrial product items produced by LDCs tax-free, up from 94 percent.
But the Japanese decision was eclipsed by a bolder concession announced in late February by the 15-nation European Union, which completely eliminated tariffs for all imports — both industrial and agricultural items — from LDCs. The lone exception on the list is arms.
Japan’s preferential tariff scheme does not include a huge chunk of agricultural products.
While welcoming Japan’s efforts to grant LDCs greater access to its market, Annan pointed out in his letter to Mori that imports from LDCs still account for a tiny 1 percent of Japan’s total imports. Annan also expressed hope that Mori will exert his personal influence to increase Japanese imports — not only industrial but also agricultural — from LDCs to help them.
Hoping to quell any backlash from LDCs at the upcoming U.N. conference, the Ministry of Economy, Trade and Industry and the Ministry of Foreign Affairs have informally asked the Ministry of Agriculture, Forestry and Fisheries to free more farm imports from levies, according to government sources.
But the request has fall on deaf ears. The farm ministry is adamantly opposed to making any concessions in agricultural trade — at least before full WTO negotiations on liberalizing the farm sector begin.
Although the new WTO round has not yet been launched, WTO negotiations on the so-called built-in agenda of agriculture and services are already under way in Geneva, albeit not on a full-scale basis.
In the Geneva negotiations on farm trade, Japan has already become a lightening rod for criticism for its heavily protectionist stance on liberalizing the farm sector.
The farm ministry “fears that if Japan makes any concessions now on farm trade, it will only face more pressure to open the Japanese market once the new round begins,” one government source said. “Therefore, the ministry wants to keep as many bargaining chips as possible for the new round.”
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