まゆの部屋

ECONOMIC FORUM / No gain without pain in WTO farm talks
Masaichi Nosaka

The Doha Round of World Trade Organization negotiations has entered a crucial stage as member states attempt to overcome their differences on the farm sector, the focal point of the round. Despite many member countries, including Japan and the United States, announcing their proposals for agriculture, there has been little progress toward narrowing differences.

There is less than two months left until the December WTO ministerial conference in Hong Kong at which the 148 WTO members need to agree on a blueprint for the final stage of the Doha Round. There is a possibility that Japan will be isolated in the talks and Japan's political decision will be key to whether the talks can reach an accord.

The results of a series of unofficial ministerial meetings in early October in Switzerland are cause for both expectation and concern over the future of the talks.

On the positive side, Japan, the United States and other members made conciliatory proposals with the aim of advancing the talks, which could possibly become the first step toward solving the stalemate.

However, WTO members remain far apart on the proposals. We would like them to meet halfway, but there will be further confusion at the talks if they cannot bridge the gap.

Japan's largest issue of concern is the further liberalization of the rice market. Japan is worried about setting a new tariff on imported rice--currently 778 percent.

Japan's real intention when it decided to liberalize the rice market at the previous Uruguay Round was to hold down the reduction of the tariff rate as much as possible and protect the domestic rice market in Doha Round negotiations.

A move toward adopting a tariff cap system for farm products can be seen throughout the Doha Round negotiations. Japan has opposed capping tariffs, but it is likely that Japan's opposition was overridden by other members.

Therefore, even if it is inevitable that Japan will have to accept tariff caps for farm products, it intends to have rice and other products, such as barley and wheat, identified as "important farm products" that can be treated as exceptions to tariff caps.

The Group of 10 food importing countries, including Japan, Switzerland and South Korea, made a proposal that reflects Japan's intention to take into consideration the important farm products of each country.

The new plan by the G-10 group proposes sorting farm products into four categories according to the size of tariffs, and then have two options to standardize the rate of tariff reductions in each category or allow some latitude in the reduction of tariffs.

For example, in the case of farm products subject to the highest current tariff of more than 70 percent, the reduction rate would be standardized at 45 percent or between 40 percent and 60 percent. In addition, under the G-10 proposal, important farm products will account for 15 percent of all agricultural products in the case of a fixed reduction rate or 10 percent in the case of a flexible reduction rate. The proposal is seemingly aimed at limiting market liberalization.

But the United States proposed a 75 percent cap and called on each country to limit the number of important farm products with high tariffs to 1 percent of all agricultural products. The United States earlier criticized the G-10's proposal.

On the other hand, the United States proposed making a concession on the reduction of domestic agricultural subsidies and to "cut subsidies by 60 percent in over five years." Japan was critical of the U.S. proposal, claiming it was "insufficient," but support for the U.S. proposal within European Union has shifted the direction of the argument.

Under such circumstances, negotiations about agricultural subsidies could be accelerated. If so, the United States would likely take a hard-line position toward tariff reductions and take the leadership in the agricultural talks.

In the past negotiations, including those for the agricultural sector, Japan was forestalled by late political decisions. As a result, it had to make a tough decision after being backed into a corner.

But it is necessary for Japan to return to the basics of the promotion of free trade and actively make a political decision to open the market. At the same time, it is essential that Japan hurriedly improve the domestic agricultural productivity so Japanese rice is internationally competitive.

If the Doha Round agricultural talks run into a snag, negotiations for the entire round of talks could come to a standstill. If so, the relevance of the WTO would be called into question. Japan must be prepared to absorb a certain amount of pain and play a leading role in the negotiations.


Nosaka is a deputy economic news editor of The Yomiuri Shimbun.

(Oct. 18, 2005)