An analysis on the agricultural reform driven by Trans-Pacific Partnership Agreement under the Abe administration

LI Mingquan1

(1.School of Economics and Management, Qingdao Agricultural University)

【Abstract】Japan has promised to further open its agricultural market on the basis of the past Economic Partnership Agreement framework. Even for the five most sensitive agricultural products, Japan has shown an open and flexible attitude in increasing quotas or reducing tariffs. Facing the coming harsh international agricultural trade environment, since the start of TPP negotiations, the Abe administration has started to push forward the agricultural reform. After the TPP was signed, Japan has further promulgated the “measures for strengthening agricultural competitiveness” in order to intensify the reform efforts. The reform measures cover a wide range including cropland, farmers’ income and Japan Agricultural Cooperatives as three axes. The Abe administration attempts to reform the rigid and inflexible system with the TPP mechanism. However, it remains to be seen whether the reforms are effective in renovating Japan’s agriculture.

【Keywords】 TPP; Abe administration; agricultural products; agricultural reform; a new era in agricultural policy;

【DOI】

【Funds】 General Project of National Social Science Foundation of China (15BGJ032)

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    Footnote

    [1]. ① The 12 member states include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. [^Back]

    [2]. ① The products mentioned in this paper are all covered by HS01-24, including general agricultural products and aquatic products, but excluding forest products. [^Back]

    [3]. ① The years here refer to fiscal years from April 1 to March 31, and N = 4, 6, 8, 9, 10, 11, 13, 16 and 21. [^Back]

    [4]. ② The so-called discriminatory reduction is manifested in the following. (1) Japan maintains the current tax rate for all member states but provides quotas to some countries. For example, for milk and processed cheese in HS04, rice and durum wheat in HS10, rice flour products and malt (others) in HS11, glucose and glucose syrup in HS17, products containing rice in HS19 and HS21, and so on, it provides quotas to just some countries such as Australia, Canada and the United States but no reduction for other member states. (2) It provides quotas to all member states but additional quotas to some countries. For example, it provides quotas in starch (corn and potatoes) and wheat flour products for all member countries but additional quotas for the United States (in starch and wheat products) and Australia (in wheat products). (3) There are differences in tariff rate reduction modes for different countries. For example, for corn (others), it promises to immediately eliminate tariffs within the quotas towards all member states but commits to also eliminating the extra-quota tariffs on Peru. For another example, it will eliminate tariffs on maltose towards the United States within 11 years but reduce just 60% of tariff rate towards other countries. [^Back]

    [5]. [^Back]

    [6]. ① In the TPP negotiations, the internationally accepted version of HS2007 then was used, but when the agreement was signed in 2016, the latest HS2012 version was used. The two are largely similar. This paper adopts the HS2007 version to examine the mode and extent of opening the market of Japanese agricultural products with supplemental interpretation on the changes in the HS2012 edition, when necessary. [^Back]

    [7]. ① Li, M. & Han, C. Japanese Studies (日本学刊), (6) (2009). [^Back]

    [8]. ② It should be noted that 137 taxable products in the HS2012 version will be subject to the current tariff rate or be exceptional, just because subdivided taxable products were added in the new version. Specifically, none of the products are completely exceptional. Quoted from [^Back]

    [9]. ③ The so-called sugar price adjustment system means that because the price differences between the imported sugar and starch products, and Japanese products are significant, Japan imposes adjustment funds on imported crude sugar, corn starch and so on and then transfers the part of funds as direct payment to relevant customers. [^Back]

    [10]. ④ Japan has two approaches to import rice: general import and SBS. General import means that the government buys rice from importers and then sells it to domestic demanders, which is Japan’s basic way of importing rice. The SBS means that the government does not directly participate in the buy and sell, and importers and domestic demanders directly transact in essence. Most rice involved in general import is used for processing products or feed, while the SBS is applied to edible rice. [^Back]

    [11]. ① In 1971, Japan liberated pork import. To prevent import surge, Japan imposed a “differential tariff system” with full taxation of the price difference in pork imported below the benchmark price. [^Back]

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    [16]. ④ In 1991, according to the Japan-US agreement, Japan liberalized beef import with tariff rate set at 75%. After accepting the results of the Uruguay Round negotiations, Japan lowered the tariff to the current 38.5%. [^Back]

    [17]. [^Back]

    [18]. ② The so-called Management and Income stabilization Program means that when the farmers in agricultural areas with relatively unfavorable production conditions (including paddy fields and dry fields) have lower income than the current standard (the average in the past five years with the maximum and the minimum excluded), the common reserve fund (contributed by the agricultural practitioners and the state at 25% and 75% respectively) of the Countermeasures may compensate for 90% of the difference. [^Back]

    [19]. ③ The so-called Special Program for the Stabilization of Beef Cattle Fattening Farming means that 80% of the difference between the income from national compensation and the cost will be compensated for by the state, when the beef fattening farming is in deficit. The source of the compensation is the common reserve fund for beef fattening farming (contributed by agricultural practitioners and the state at 25% and 75% respectively). [^Back]

    [20]. ④ The so-called Special Program for the Stabilization of Pig Farming means that the state compensates for 80% of the difference between income and cost in the case of pig farming deficit. The compensation comes from the common reserve fund for pig farming, which is contributed by agricultural practitioners and the state each at 50% now and 1 : 3 after the TPP takes effect. [^Back]

    [21]. ⑤ The Deficiency Payment Program for Milk Producers of Processing Applications refers to a system that subsidizes farmers who sell raw milk (cheaper than the dairy products for direct drinking) to butter or skim milk powder producers. [^Back]

    [22]. [^Back]

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    [25]. ④ The so-called “three blights” refer to the Cropland Act strictly limiting cropland lease, the rice price support system operating at high price, and JA raising the prices of inputs by its monopoly position. [^Back]

    [26]. [^Back]

    [27]. ⑥ The Uruguay Round negotiations forced Japan to accept the article concerning minimum import of rice. The Hosokawa Cabinet then believed that the article would have no impact on Japanese rice production (because imported rice was only used for processing or foreign aid), so no so-called agricultural countermeasures were promulgated. However, LDP as opposition party at that time implemented an agricultural countermeasure with a budget of JPY 6.01 trillion after regaining power in 1996. [^Back]

    [28]. ① The 12 items include the following: development of systems to ensure human resources required to realize “a new era in agricultural policy”; revision of the price formation mechanism of production materials (feed, machinery, fertilizers etc.) that leads to the higher incomes of producers; establishment of industry structure in distribution and processing that enables for producers to trade in favorable and stable conditions; revision of the Land Improvement Program to ensure smooth implementation of truly necessary infrastructure development ; establishment of system for strategic exports; country of origin labelling requirement for raw materials; introduction of the “check-off program”; continued exploration for the introduction of the income insurance program; measures to promote feed rice to achieve firmly its production quantity goal set out in the Basic Plan for Food, Agriculture and Rural Areas in 2015 to ensure for farmers to produce feed rice with confidence while raising the productivity; measures for the stable operation of the Mixed Feed Price Stabilization Program; further exploration of measures for strengthening the production base of beef cattle and dairy; mechanism of improving employment opportunities of farmers in rural areas. [^Back]

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    [34]. ① Que, D. & Pan, X. Contemporary Economy of Japan (现代日本经济), (4) (2016). [^Back]

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    [39]. ③ See Liu, H. & Sun, H. Japan Studies (日本研究), (4) (2016). [^Back]

    [40]. ④ See Feng, Z. & Lin, C. Japanese Studies (日本学刊), (2) (2009). [^Back]

    [41]. ⑤ See Wen, T., Hou, H. & Ji, H. Issues in Agricultural Economy (农业经济问题), (2) (2016). [^Back]

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    [44]. ③ See Zhang, J. & Long, H. World Agriculture (世界农业), (10) (2016). [^Back]

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This Article

ISSN:1002-7874

CN: 11-2747/D

Vol , No. 01, Pages 46-65

January 2018

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Article Outline

Abstract

  • 1 Opening of the market of Japanese agricultural products under the TPP framework
  • 2 Impact of the TPP on Japanese agriculture
  • 3 Expedient measure of the Abe administration toward the TPP: Countermeasures against the TPP in the Agriculture, Forestry and Fisheries Sector
  • 4 Abe administration’s measures to deepen agricultural reform
  • 5 Prospect of Abe administration’s agricultural reform
  • Footnote