It's time for Japan's negotiators to protect rice farmers in other ways besides high tariffs, argues an economist at Hitotsubashi University, after six days of frustrating world trade talks that ended Sunday in Hong Kong.
The Doha Round of World Trade Organization talks remains on its feet -- but just barely, many fear. The Hong Kong ministerial meeting, while agreeing to a joint statement, failed to bridge serious differences that stand in the way of a sweeping global trade deal.
To keep the talks alive, the WTO's members agreed on a modest aid package for the poorest nations, a date for scrapping one type of farm subsidy and an April 30 deadline to hammer out an outline on the most contentious issue -- how to open up farm markets.
That deadline will be hard to meet, making a broader agreement by the end of 2006 "very difficult," according to Jota Ishikawa, a professor of economics at Hitotsubashi University in Tokyo.
"But I don't believe the Doha Round will dissolve altogether," Jota said. "Things will move when the U.S. and the EU decide to join hands. . . . Japan needs to be prepared for that, if and when it happens."
Farm issues have been the main hangup for the trade talks. Developing nations and food exporters are unhappy about food importers' high tariffs and subsidies.
The U.S. has high tariffs on some agricultural products like sugar, as does the European Union.
Japan, for its part places a 778 percent tariff on rice imports in excess of the 770 tons of rice it now imports under a low-tariff quota. The quota is equivalent to about 7.2 percent of domestic consumption.
The Agriculture, Forestry and Fisheries Ministry argues that tariffs are necessary to protect the country's food self-sufficiency rate, noting that the global population is set to grow to 7.9 billion by 2025 and to 9.1 billion by 2050, from 6.1 billion now.
To secure a steady and safe supply of food in the event of natural disaster, war or disease, Japan -- which currently imports 60 percent of the food it consumes -- needs to produce a certain portion of its food on its own, ministry officials say.
The U.S. has proposed setting a mandatory tariff limit for industrialized nations of 75 percent for agricultural products. Japan opposes a tariff ceiling.
Each country has different environment and production conditions, and the different tariff rates reflect that, said Aoi Ishihara, vice minister of agriculture, prior to the Hong Kong WTO meetings.
"Setting tariff ceilings completely ignores such differences," he said.
Instead, Japan has proposed lowering tariffs by a maximum of 30 percent. That would mean a 544 percent tariff on Japan's nonquota rice imports.
As the Doha Round moves into its fifth year, Japan plans to work with fellow Group of 10 net food importers, including Switzerland, Norway and South Korea, a senior Foreign Ministry official said, to search for a way to protect sensitive items from compulsory low tariffs.
Hitotsubashi University's Ishikawa suggests the government give farmers subsidies in line with WTO rules, instead of imposing the astronomical tariffs.
Subsidies would protect farmers, lower tariff-inflated food prices and clear the way for a broader agreement on world trade in farm products all at once, he said.
Cheap foreign rice won't flood the Japanese market even if the government lowers tariffs to the U.S.-proposed ceiling, he added, because consumers are unlikely to be drawn to either long-grain rice or rice flour.
"Rice tariffs have become a symbol -- lowering them signals that the government has abandoned farmers.
"Japan, whose economy is driven by trade, will gain more than it loses from a successful conclusion to the Doha Round," Ishikawa said.
Trade among WTO members accounts for 90 percent of all global trade.
But Masato Kitera, deputy director general of the Foreign Ministry's economic affairs bureau, expressed confidence that the Doha Round will succeed without Japan giving in on the rice issue.
"Japan is willing to make concessions in a number of areas, just not in a few sensitive areas," he said. "I believe the concessions we've made so far have been well received in the international community."
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