Japan PM Angers Farmers With Step Towards Free Trade Pact

Nov 11, 2011 2:32pm

Japanese Prime Minister Yoshihiko Noda announced his intention to join discussions for a U.S.-backed free trade zone Friday, facing revolt from his own party and the powerful farm lobby.

The Trans-Pacific Partnership would eliminate trade barriers between 10 countries and open up Japan’s $48 billion farm market - a move opponents say threatens the livelihood of farmers, but that supporters argue is vital to keeping the world’s third-largest economy competitive.

“In order to pass our prosperity to the next generation and to have a vibrant society, we need to capture Asia-Pacific’s growth,” Noda said at a press conference.

Noda’s decision comes on the eve of the annual Asia-Pacific Economic Cooperation (APEC) forum in Honolulu this weekend. APEC members - including Vietnam, Australia, and Malaysia - view the trade pact as the first step in establishing a free trade zone that encompasses all of Asia and the Pacific.

Just 16 percent of Japan’s trade is covered by free trade agreements, compared with 36 percent for rival South Korea, and TPP supporters argue opening Japanese markets would lift a sagging economy, battered by a strong currency, an aging population, and the March 11 tsunami and nuclear disaster.  The Cabinet Office has said participation in the TPP would boost gross domestic product by $34.7 billion by giving Japanese exporters greater access to the U.S. market and other countries.

But the pact has faced fierce opposition from the heavily protected agriculture sector, which accounts for just 1.5 percent of economic output but has a large influence in parliament. Farmers say they simply can’t compete with larger competitors in the U.S. and Australia. Rice farmers, who are protected by a 778 percent tariff now, say eliminating that would be devastating.

Opponents within Noda’s ruling Democratic Party of Japan, including the former agriculture minister, have threatened to leave the party, if Noda decides to join the talks. Japan’s largest agricultural lobby has said an accord would mean the “collapse” of the country’s agriculture and fisheries industry.

On Tuesday, 6,000 members of Japan’s agricultural and fishery groups packed a Tokyo arena to rally against the pact, saying the administration had not laid out a comprehensive case for joining. 

“The government is only passing along information that is convenient for their case,” said Akira Banzai, president of the Central Union of Agriculture Cooperatives. “No matter how you look at it, this will have a negative impact on Japan.”

Polls show the public is divided. In a recent Mainichi newspaper poll, 34 percent of voters said Japan should join the TPP, while 25 percent said it shouldn’t.

In a meeting with Japanese Foreign Minister Koichiro Gemba ahead of the APEC summit, U.S. Secretary of State Hillary Clinton welcomed Japan’s planned participation in trade negotiations.

But senior U.S. lawmakers have expressed skepticism about Japan’s willingness to open up its historically closed market. On Tuesday, leaders of the House Ways and Means committee urged the Obama administration to consult with Congress “well in advance” of any decisions related to Japan’s inclusion into TPP talks.

In a letter sent to U.S. Trade Representative Ron Kirk, they wrote, “Japan’s inclusion would add dramatically new dimensions and complexities to the TPP negotiations. Japan has long sheltered its domestic market from meaningful competition. … This raises concerns as to whether traditional disciplines contained in past free trade agreements can alone be effective in opening a market such as Japan’s.”

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