Mainichi Japan | February 9, 2011
Australian trade deal real test of gov’t resolve on ’Heisei opening of Japan’
Stalled negotiations between the governments of Japan and Australia toward an Economic Partnership Agreement (EPA) have now restarted, and will be a major test of the Japanese government’s determination to back up its current pet mantra of "the Heisei opening of Japan" with real action, particularly against the backdrop of Trans-Pacific Partnership (TPP) talks — to which Australia is also party.
Resource-poor Japan is not just relying on Australia for a significant percentage of its foodstuffs such as wheat, but is outright dependent on its southern ally for most of its iron ore, coal and natural gas. Needless to say, this country’s relationship with Australia is extremely important for its economic security.
However, with most Australian exports to Japan already going untaxed by Japanese customs, unless Japan agrees to kill duties on agricultural imports — a very tall order for a nation already facing an eroding agricultural sector — the merits of signing an EPA with Japan from an Australian perspective are very slim indeed.
In previous EPA negotiations, Australia had called for the elimination of Japanese duties on four basic items — beef, wheat, dairy products and sugar — but Japan’s lukewarm attitude to opening its agricultural market soon became a serious impediment to progress, and talks were broken off.
As compared with the TPP talks, participation in which the government has said it will make a decision on by June this year, EPA negotiations with Australia are aiming for a far greater opening of the Japanese market. Essentially, a deal with Australia is a prerequisite for participation in the TPP, making this a do-or-die moment for the Japanese administration.
As the proposed merger between steel giants Nippon Steel Corp. and Sumitomo Metal Industries suggests, in a global environment where Japanese companies have to compete with and beat those from emerging nations, size matters, and large-scale consolidation is necessary. From the perspective of domestic employment, too, Japan cannot leave its products open to tax and duty discrimination that would put them at a competitive disadvantage.
Certainly, slashing import duties would impact Japanese sugar and dairy product makers, and compensation measures would be necessary. Government support for farming families — long criticized as vote-buying pork barrel politics — should be used to help agricultural producers hit hard by market liberalization, and we call on the government to improve the subsidy system so that it performs this function.
The government is apparently aiming to have an EPA with Australia nailed down by June. If the two countries make progress on the deal, it will give a boost to Japanese participation in the TPP, in which the present administration has invested a great deal of its political capital.
Unlike the many other countries Japan has inked EPAs with, Australia is one of the world’s leading agricultural nations, and Japanese agricultural associations have come out in force against a deal with Australia.
Even so, the graying of Japan’s rural population will continue. If Japan simply insists on the preservation of high trade barriers to protect the rural economy, it will not slow the decline of Japanese agriculture as it now stands.
This does not mean that we should turn our gaze away from the problems right in front of us. Rather, it means that we should seek to build Japanese productivity and, provide Japanese agriculture with the competitive tools it needs to convert that sector into a viable force in the global market. The EPA negotiations with Australia are a part of that, and we urge the government to approach them from this perspective.