Non trade concerns Japan’ key concept for agricultural negotiations

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Non trade concernsNon trade concerns Japan’ key concept Japan’ key concept

for for agricultural negotiationsagricultural negotiations

May 2002 at Ottawa IPC Seminar

JIRO SHIWAKU

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Launching of Comprehensive WTO Trade Round by Doha Declaration

• Agriculture is a part of Quasi-comprehensive agenda

• But,Investment and Competion deferred to the 5th Ministeral

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・

Ag part of Doha Declaration Confirmation of Art 20 of UR Ag. Agreement

• Substantial improvement of market access

• Reduction of all forms of export subsidies, with a view to phasing out

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Substantial reductions in distorting

domestic support

Take into account

• Non-trade concerns• Special & Differential treatment

for developing countries

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Ag negotiations undertaken in advance of Doha Declaration

45 Proposals presented by 121 members since March 2000

Modalities of commitments to be finalized by 31 March 2003

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Planned Schedule of establishment of

modalities

1) June to November 2002

Formal and informal discussion

2) 18 December 2002

Overview draft paper by chairperson

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January to March 2003• Discussion on the basis of draft paper

31 March 2003• Completion of modalities

Completion of negotiations (single undertaking)• by January 2005

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Japan presented negotiating proposal December 2000

• Basic features of Japanese proposal;

1) Coexistence of various types of agriculture,1. multi-functionality of agriculture

2. food security

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2) Adjustment of such elements of the rules & disciplines as are regarded to be imbalanced in terms of interests between exporting and importing countries

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Background of importance of multi-functionalty and food security

Arable land:4.6million hectars Paddy field: 1.8 million hectars Upland dry field : 2.8million hectars (vegetables , fruits, forage crops and others) Mountain & semi- mountain areas:

2/3 of national land

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Self sufficiency ratio: Within 40% of total S.S.R. in terms of

calorie jntake,there is a two tier structure • Extremely low S.S.R.products such as

wheat(9%), Barley(7%),Soya beans(6%), Corns(nearly 0%)

• Nearly self sufficient Rice(92%)

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Medium & long term instability of World Food Demand & Supply Demand

• Population growth in developing countries

• Increasing demand for meat, dairy products, oil&fat

• Increasing supply requirement for feed grain, oil seed

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Supply Various constraints on increases in production

Stagnated growth of productivityconstrains on expansion of agricultural

landDegradation of the environment

(desertification, global warming etc.)

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Short-term Instability of Supply and Demand

• Low percentage export/production• Dominant Supply by a few major

exporting countries• Diminishing stockholding by major

exporting countries• Dominance of grain majors and single desk

sellers

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Perceptions of Food Security among Japanese Public

Future food supply

feel very uneasy 27% feel uneasy 51% not feel uneasy 17% not feel uneasy at all 2%

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Domestic Production Better produce domestically even if the price is higher 43%

Better produce domestically at least for staple food 40% Better import if the price is cheaper 11%

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Multi-functionalty of Agriculture Conservation of national landPreservation of sound environmentMaintenance of good landscape

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Terraced paddy field in mountTerraced paddy field in mountainous areaainous area

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Multi-functional character of paddy farming 1) Flood prevention The flat paddy field surrounded by bunds(small dyke)has the ability to hold ponding water,which prevent quick outflow of heavy rainfall

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A large amount of rainwater can be stored in a paddy field during a storm, at least for a few days. Accordingly,the peak flow rate of rivers will decrease and residential lots in downstream will be protected from flooding.

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2) Soil erosion prevention Surface water flow during a rainfall within a paddy field is moderate due to the flatness and the existence of bunks (dyke). Consequently soil erosion is

usually less than that in a upland field Also soil erosion by wind is rare in the

case of paddy whereas it is one of the serious environmental problem for upland dry field.

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3) Purification of water quality The pollution of groundwaters with nitrate is.very rare in paddy farming , not only because excess nitrogen is not usually applied to rice to avoid their lodging , but also because nitrate is denitrified to nitrogen gas in anaerobic paddy soil.4) Higher Utilization of Water Resources

through a repeated use of irrigated water in the paddy field

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5) Conservation of biodiversity • Paddy field can serve as the habitat for

aquatic wildlife, such as flogs, dragonflies, medakas, fireflies, giant water bugs.

• Paddy field is also to offer habitat for migratory birds,such as sandpiper, plover, cranes from Siberia through Japan to Southeast Asia & Oceania.

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Perception of Multifunctionalty of Agriculture among Juapanese PublicNecessity of maximaizing the multifunctional role of agriculture

15%

23%62%

agree

rather　agree

neither　agreenor　oppose

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Role of Agriculture Role of Agriculture ｏｔｈｅｒ ｔｈａｎｏｔｈｅｒ ｔｈａｎFood Food production production

65.3%

56.4%45.3%

39.8%38.4%

34.4%32.1%32.1%29.9%

33.4%

0% 10% 20% 30% 40% 50% 60% 70%

rural amenity

maintaining and revitalizing the ruralcommunitytransmitting culture

modification of climate change

cultivation of aesthetic sensitivity

formation of scenic landscape

food security

fostering of water resources

Land conservation

preservation of the naturalenvironment

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Japan Commitment in URAA 1. Export subsidies :continuation of non- utilization Domestic support: 20% reduction of AMS from 4966.1billion yen (base period) to 3972.9 billion yen (2000) Market access: tarrification of such products as starch, wheat, barley, dairy products, etc. Average 36% reduction as well as minimum 15% reduction of tariff

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Japan URAA commitment (continued) Special treatment of Rice Trade Regime

• Deferred introduction of tarrified scheme with minimum access commitment higher than the standard case as a compensation.(48% in place of 3 5%)

• Shift to the tarrified scheme of rice. April 1999(2 years in advance of last year of implementation period)

• As a result, minimum access quantity has been slightly lessened from 8% to 7.2% in 2000

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1) Importation of minimum access rice, at the

present level of 7.2% of domestic consumption exerts unbearable burden to paddy farmers who are struggling to curtail nearly 40% of production capacity (one million hectares) to adjust to the decreasing trend of consumption (per capita consumption of rice: 138 kg in 1965, 60kg in 2000)

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2) Rice is a life line staple food for the country of 120 million population, because ;1) their production by the waterlogged paddy is a very sustainable way in humid conditions of Asian monsoon climate zone

2) it is only one major item of Japanese agriculture to be able to meet the entire national consumption requirements.

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There are strong sentiments that it is unfair for Japan to continue to be obliged with this higher than standard minimum access even after the shift to tariffication

Any pressure to further opening Japanese rice market would be strongly resisted not only by farm groups but also by most consumers whose concern for food security is very high.

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Drastic change in policy formulation structure Key players:

Government bureaucrats __MAFF __Four other Agencies(MOFA, MITI,MOF, EPA)

LDP Ag. Trade committeeZenchyu (Farm organization)

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Until URAA

The leading role of MAFF Bureaucrats in formulating policy directions.

___-Policy adjustment within the MAFF itself as well as among five government agencies.

The constructive consultation of the MAFF with LDP Agr. Trade committee which was guided by a small number of well desciplined 　 leaders

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Political Reaction against Japan’s acceptance of the URAA

• In 1993, 8 coalition of non-LDP government had accepted the URAA.

• Strong resentment of LDP-farm related politicians against the Japan's acceptance of the URAA as being unfavourable to Japan's agricultural and food security interests.

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After UR Weakened leadership role of the bureaucrats of MAFF and other agencies, due to : poor management of economic policy during the so-called lost 90's : a series of scandals by high ranking government officials Shift of policy decision initiatives from the bureaucrats and changes in political coordination style in LDP Ag. trade committee

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• Frequent and close Tripartite consultations among Zenchyu, LDP and MAFF

• The incumbent leadership of this powerful committee is determined to rectify the outcomes of URAA which they perceive as not taking fully into account the multifunctionality of agriculture nor well balanced in terms of the interests between the exporting and importing countries

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Japan's negotiating position on specific factors; 1) Market access As for level of tariff and access quantity, they must be set at appropriate levels with

reasonable flexibility, considering such various elements :

securing the benefits of multifunctionalty; ensuring food security; the current situation of production and consumption for each product; international supply and demand;

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; and the progress of domestic agricultural policy reform.

In particular, due consideration should be given to the tarrified products, in order to secure the benefits of multifunctionalty and to ensure food security in each country .

Special safeguard measures should be maintained.

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2 Domestic support

In order to enable each country to promote agricultural policy reform , while giving consideration to securing the benefits of the multifunctionalty of agriculture and ensuring food security , the following improvements should be made:

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__requirements for Green Box policies should be improved, based on the

experience of URAA implementation; the Blue Box policies should be maintained

__domestic support level should be determined in a realistic manner

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3 Rules and disciplines on exports Export rules and disciplines should be strengthened, since it is necessary to ensure the stability and predicability of exports in order to ensure food security in importing countries.

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The End of My Presentation Thank you for listening