This research examines the interrelationships between the reforms undertaken through the European Union’s (EU) Common Agricultural Policy (CAP) and multilateral rule-making negotiations under the General Agreement on Trades and Tariffs (GATT)/World Trade Organization (WTO), the processes of dispute settlement mechanisms under the WTO, and bilateral negotiations of free trade agreements (FTAs).
Since the Uruguay Round (UR; 1986-1994) of the GATT, multilateral rule-making negotiations have driven by CAP reforms. In 1992―under external pressure from trading partners, including the USA and the Cairns Group of Fair Trading Nations―the EU reformed its CAP to help conclude the UR negotiations. This reform gave the EU a bargaining advantage in multilateral trade negotiations, and ultimately resulted in rules and regulations regarding agricultural market-access and subsidies that were largely advantageous to the EU. The European agricultural sector is still characterized by high levels of protection for domestic producers.
Through the CAP, the EU aggressively reformed domestic agricultural support programs to prevent future disputes being settled under the dispute settlement mechanisms of the WTO. For instance, after a decision against the EU, it abolished export subsidies on sugar and drastically reformed the European Common Sugar Policy. A new, market-oriented policy for sugar production was also introduced under external pressure from trading partners.
The EU also declared some of the most competitive food-exporting countries, including Australia, as unacceptable partners for FTAs. Through trade diversion effects, FTAs concluded among these major food exporters―such as the Trans-Pacific Strategic Economic Partnership Agreement (TPP)―have negatively impacted the economy of the EU. However, the EU aims to reduce these potentially negative impacts by concluding bilateral FTAs with Japan and the USA. Acceding to the TPP would bring little benefit to the EU’s agriculture sector. Thus, while the TPP requires liberalization across agricultural and industrial sectors, the EU rather intends to enhance the international competitiveness of its agricultural products by gradually opening its agricultural market through bilateral FTAs with major trading partners, except the most competitive ones mentioned above.
The EU’s approach to regulate its agricultural markets harmonizes differing interests: maintaining the multilateral trading system; preventing legal disputes; responding to external pressures; constructing global FTA networks; and enhancing agricultural competitiveness. It does so by taking advantage of the various interrelationships between the CAP reforms and the multilateral rule-making negotiations under the GATT/WTO; the processes of the dispute settlement mechanisms of the WTO; and bilateral negotiation of FTAs.
This report clarifies the features of the agricultural policy formation process in Japan by comparing it with the processes in the United States and the European Union. Concretely, it is clarified through a verification of examples in international negotiations and domestic policy (i.e., how the United States had Japan open the rice market and establish the 1996 agricultural bill, and how the EU coped with UR agricultural negotiations and realized the CAP reform in1992). About the US : There are meetings at which the Cabinet members thoroughly deliberate on national strategies. The Fast-Truck releases the government from pressure by Congress or agricultural organizations in international negotiations so that the government can negotiate flexibly. With a change of power, civilians are employed as high-ranking government officials, and many talented persons participate in the policy planning, which can therefore be innovative. Agricultural organizations exert very strong influence on the policy formation process through their lobbying. About the EU : The transparency of the policy formation process is very high. The term of the meetings at which representatives of the EU member countries argue is not determined, enabling them to conduct thorough arguments. Administration (DGVI) has intense leadership. Because the agricultural administration bureaucrats of the EU create a policy theoretically, it will become a rational policy. Because the EU receives no requests directly from the agricultural organizations of each country, it can form a policy flexibly and objectively. About Japan : The organization for creating clear national strategy is not established. Administration bureaucrats have become unable to make positive and creative proposals. The transparency of the policy formation process is very low. From the viewpoint of the influence of the agricultural organization on a policy formation process, Japan can make policy planning more objectively than the United States can, but less objectively and flexibly than the European Union can.
This paper aims to search the direction of Japanese agricultural policy orientating toward the next WTO agricultural negotiations and the New Food/Agriculture/Rural Basic Law structuring, as clarifying characteristics of agricultural policy in developed countries. The following points can be pointed out when we try to characterize the agricultural policies in developed countries under WTO. The first fact is having reduced agricultural budgets. The second is having shifted the weight of measures to "decoupled" direct income payments that have no, or at most minimal, trade-distorting effects or effects on production. The third is having converted policy to paying consideration to both resource conservation and the maintenance of rural communities. Japanese agriculture, too, cannot evade the current trend of international policy in the future. Japanese agricultural policy canvasses the contents of agricultural public works and needs to enrich the direct income payments. It is necessary for Japanese agricultural policy to establish the same minimum price guarantee system as the U.S. and EU. In short, it is important that Japanese agricultural policy should aim to maintain a reasonable livelihood for farmers and resource conservators.
This article aims to analyze the change of Japan’s negotiating strategy for the trade liberalization. Among various negotiations of trade liberalizations which Japan has involved, the most difficult issue has been agricultural liberalization. In the previous studies, this issue has been studied from the viewpoint of strong political influence of agricultural protection group, such as Nokyo (Japan Agricultural Cooperative), MAFF (Ministry of Agricultural, Forestry, and Fisheries), and LDP representatives (especially agricultural policy specialists).
However, as a result of electoral reform in 1994, Japanese farmers’ power has declined, and Japanese consumers’ political influence has increased. With this changing political circumstance, Japan’s agricultural negotiating strategy should change. These changes can’t be derived by framework of previous studies which focus on only producer. Therefore, this paper focuses on consumers which have been disregarded so far. Especially, this paper pays attention to the consumers’ concern for increased food risks as a result of liberalization. In the economic theory, consumers are presumed to support trade liberalization because they favored the price decline. However, in the countries like Japan which has already a liberalized agricultural market to certain degree, consumers have concerns also for liberalization risks such as food safety or food security, and thus the representatives and officials need to deal with these issues.
According to this framework, this paper takes agricultural negotiations in the WTO Doha Round as a case. In the negotiation process Japan cooperated with “friend countries” by using the universal concept of “multi-functionality of the agriculture” and appealed the maintenance of the agricultural various functions. Moreover, Japan’s negotiating proposal in 2000 emphasized that the multi-functionality was supported by the Japanese consumers. This proposal came from lessons in the Uruguay Round that Japan was criticized for having advocated food security only from the aspect of producers and it has little impacts on the negotiation. Japan’s strategy in the Doha Round succeeded to some extent as the concept of multi-functionality was included in the Doha ministerial declaration as “consideration to non-trade concerns of the agriculture”. Afterwards, Japan formed G10 with food importing countries and continued proposing its position with them. Especially, about food security, Japan proposed making concrete rules for the unilaterally export regulation of agricultural exporting country and it was reflected for the latest chairperson text.
Japan’s strategy still includes demands to protect agriculture, however, demands specialized to farmers have decreased considerably and it has been reflecting more consumer’s concern for the liberalization compared to before. Such changes of the strategy cannot be understood by only a producer centered conventional framework, and the framework focused on consumers’ risk as described in this article will become more important.