A way forward for Japanese agriculture

Abstract

Under the GATT Uruguay Round Agreement on Agriculture (URAA) that came into effect on 1 January 1995, Japan pledged to convert non-tariff barriers into tariff equivalents for 28 commodities. The implementation of the Agreement on Agriculture triggered domestic policy reform. In July 1999 the Japanese Diet passed the Basic Law on Food, Agriculture and Rural Areas, which replaced the Agricultural Basic Law of 1961. The new law outlines the direction and principles of Japanese agricultural policy for the 21st century and is more consistent with the World Trade Organisation (WTO) regime. However, these measures represent only the start of agricultural reform. Where is Japanese agriculture headed and do these changes represent a significant movement toward real reform? Agricultural policymaking in Japan reflects political power struggles. Agriculture is a highly protected sector, and as in many other industrialised countries, protection has increased as agriculture’s contribution to the economy has shrunk. Consumers – a larger and less politically organised group – tolerate agricultural protection as long as their incomes are rising, while agricultural producers are far smaller in number and lobby strongly as they have far more to lose. Pressure from foreign producers is a strong countervailing force against domestic interests that support agricultural protection, and explains why agriculture was one of the most important areas in the Uruguay Round negotiations.