Japan is set to impose emergency restrictions on three Chinese agricultural products, imports of which have risen markedly in recent years: leeks, shiitake mushrooms and rushes for tatami matting. It is the first time Japan has decided to invoke “safeguards,” temporary import curbs recognized by the World Trade Organization. These measures, to take effect on April 23, will raise the tariffs on these items sharply when their imports exceed given limits.
The safeguards will be effective for 200 days, during which time the government will negotiate with Beijing for China to limit exports voluntarily. At the same time, Japan will take steps to make domestic farmers more competitive. It may be difficult, however, to secure Chinese agreement on voluntary export restraint. There is, indeed, a possibility that China might take retaliatory steps.
The safeguards have been used in the past by other countries, but only as an exception to the rule of fair trade. Chinese opposition is to be expected because such import restrictions, however legitimate, constitute a temporary suspension of rational economic forces.
The question is whether the restrictions can be be kept within reasonable bounds. The first thing to do in this regard is balance as far as possible the interests of consumers and those of producers. The second priority is to consider the peculiarities of agriculture in the context of market principles and free trade — in other words, to work out programs designed to protect sectors that really need protecting.
Raising tariffs is a relatively easy way to shut out cheap imports. But, clearly, it goes against consumers’ interests. Domestic products in Japan, a high-wage country, are already expensive by international standards. Inevitably, domestic producers and distributors face stiff price competition from foreign products.
To get around import competition, some firms have moved production to China and elsewhere so they can import low-cost products directly from their overseas farms and factories. This “develop and import” scheme — which is not confined to agriculture — is here to stay. The three items selected for safeguard protection are being imported in large part under similar arrangements established by restaurant-chain operators.
But it is also true that domestic producers of these items, most of them small farmers, have been hit hard by the influx of low-cost products from China. That explains why more than 1,000 local assemblies have passed resolutions calling for safeguards. With parliamentary elections scheduled for July, the ruling parties have also urged the government to take these protective measures.
However, the predicament of these small producers is not a sufficient reason to restrict low-price imports and levy high tariffs at consumers’ expense. The products in question are different from rice, the nation’s staple food. Many consumers probably believe that the high cost of rice is unavoidable in order to protect rice farmers. But the three items at issue cannot be considered in the same light.
Japan is already the world’s largest importer of farm products. Many items, such as soybeans, are purchased almost entirely from abroad. It may be that the government is trying to prevent the nation’s dependence on imports from rising any further. As regards the products in question, the Agriculture and Fisheries Ministry intends to draw up a relief program while the safeguards are in place. The program must show forward-looking steps, such as improving the quality of the products or inducing hard-hit farmers to switch to more profitable crops. Without such positive countervailing measures, the safeguards probably will not win public acceptance.
The government faces a major test in the conduct of its farm policy. There are already signs that farmers in other sectors, such as eel and wakame seaweed, might also seek import relief. Pressures for protection from cheap imports are also rising in parts of the textile industry, such as towel manufacturing. With a new round of world-trade talks expected to start this year under the auspices of the WTO, Japan needs to stake out a coherent negotiating position on agriculture.
It is not enough to insist that Japan, like other WTO members, has the right to use safeguards. The real test for the government, if the exercise of this right is unavoidable, is to make the best possible use of it by introducing the kind of structural measures that will convince consumers — and world opinion generally — that the safeguard is only temporary. Otherwise, Japan will be accused of protectionism. The challenge for the government, then, is to follow up the safeguards in ways that in the long run will promote free trade.
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