Japan Pressing Ahead With Rice Tariffication

14 December 1998

Japan continues to move forward with a plan to implement a rice tariffication scheme in spring 1999 (See BRIDGES Weekly Trade News Digest Vol. 2, No. 46 November 30, 1998). The proposed scheme would replace the current Japanese "minimum access" policy for rice imports, implemented as part of its commitments under the General Agreement on Tariffs and Trade (GATT), which obliges Japan to import rice equal to eight percent of total domestic consumption by 2000. Japan began importing rice at a rate of four percent consumption in 1995 and committed to an annual 0.8 percent increase in imports each year.

By adopting tariffication, Japan would now be allowed to slow its mandatory increase in imports to 0.4 percent per year, while applying tariffs on rice imports up to 1000%. The tariffication scheme is one option prescribed under GATT, Japan is still expected to face strong opposition to its rice policy from rice exporting countries when WTO agriculture talks get underway next year. Japanese smaller farmers unions and some non-governmental organisations are lobbying the government to rethink the policy, fearful that tariffication paves the way for elimination of rice tariffs all together as pressure mounts on Japan in those trade talks. These opponents argue that the policy would ultimately undermine Japanese food self-sufficiency, and say also that the policy ignores the importance of protecting and enhancing the self-reliance of small farmers both in Japan and other
countries. Japan's largest rice-growers lobby, the Central Union of Agricultural Co-operatives (Zenchu) said it would support the tariffication scheme.

The U.S., Australia and Thailand worry that tariffication would limit the guaranteed access for their rice exports. U.S. Trade Representative Charlene Barshefsky last week requested consultations with Japan before the tariffication scheme is adopted. Japan rejected the request saying that it is under no obligation to hold consultations on the matter, as long as the tariff rate falls within a WTO prescribed range. Specifically for U.S. rice, Japan has proposed a 300 percent tariff, which would price U.S. rice imports about 25 percent above domestic product.

In other regional news, Japan and South Korea have begun talks on a free trade agreement. South Korea hopes to use increased trade with Japan as a way to pull itself out of a deep recession. Japan hopes its relationship with South Korea would help balance China's growing economic strength in the region.

"U.S. asks Japan to hold talks on rice tariff plan," KYODO NEWS INTERNATIONAL, December 4, 1998; "Early acceptance of rice tariffs is right policy now, for long run," THE NIKKEI WEEKLY, December 7, 1998; "Japan may strain rice relations," AUSTRALIAN FINANCIAL REVIEW, December 9, 1998; "Japan not to hold prior talks on rice imports," KYODO NEWS INTERNATIONAL, December 4, 1998; "Japan, South Korea explore free trade," THE NIKKEI WEEKLY, December 7, 1998.

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