Home > Report on Agricultural Trade (Summary)


text

Report on Agricultural Trade (Summary)

October 1999
Ministry of Agriculture, Forestry and Fisheries

Chapter I  Trends of the World's Agricultural Trade

(1)Characteristics of Agricultural Trade

  1. In the world’s agricultural trade, the share of export volume in the production volume (trading rate) is small, and the structure of the trade is such that a number of exporting countries and regions is small. Therefore, it is essentially unstable, being easily influenced by production or policy changes of certain producing or exporting countries.
  2. The world grain consumption has been steadily increasing due to the population increase, particularly in developing countries, and the expansion of meat consumption with income growth. On the other hand, the volume of grain production is greatly affected by the agricultural policy or weather conditions of the major producing countries.
  3. In recent years, the supply-demand gap of grain has been easing gradually because of good harvests and other causes, since 1995 and 1996 when the ending stock rate dropped to the lowest level. However, the ending stock rate has been low compared to the past. In addition, there is an increasing possibility of changes in crop conditions from the effect of abnormal weather. So, the food supply in the world is becoming increasingly unstable in the short-term. Also, it is necessary to consider the possibility that the food supply in the world will be hard-pressed in the medium-and long-term, due to the considerable increase in grain demand with the population increase and expanded meat consumption.

(2)Changes in the Structure of Agricultural Trade

  1. With regard to imports, the shares of the former USSR and East Europe have decreased due to domestic economic confusions, while the shares of Asia, Africa and South America have increased because of the advancement and diversification of consumer needs with the population increase and economic growth. As for exports, the US, which has reinforced its efforts in export promotion, and South America, which has endeavored to expand agricultural production, have been increasing their shares.
  2. By observing the recent trend of grain trade, exports from the US, the EU and Oceania to the former USSR or East-European countries have decreased, and exports from the US and Oceania to Asia or Africa have significantly increased. Developing countries of Asia, Africa, etc., are expected to continue increasing their demand for agricultural products with the rising income level. So, such dependency on developed exporting countries is likely to become even stronger in the future.
  3. By observing the trend of agricultural trade balance by region, the bipolarization between export-dependent regions such as North America and Oceania and import-dependent regions such as Asia becomes clear. At the same time, it is apparent that the agricultural trade balance of developing countries in Asia and Africa, is deteriorating.

Chapter II  Current Situation of Japan's Agricultural Trade

(1)Trends in Japan's Agricultural Trade

  1. Japan's trade balance has constantly been in surplus since 1981, because exports expanded more than imports, especially for industrial products. Japan's trade structure indicates a great deficit in food and mineral fuels, while it indicates a great surplus in machinery and transportation equipment. Its export and import of each product category is extremely unbalanced compared with other major developed countries.
  2. Japan's imports of agricultural products have significantly expanded due to the diversification/advancement of consumer needs under the restricted land conditions, the effect of the long-term yen appreciation, improvement of market accesses, etc. Japan's share of the world's import of agricultural products is also high, ranking first in the world for wheat, corn and meat, and ranking second following the EU for soybeans.
  3. Observing the import trend by item, imports of grain and vegetable oil increased considerably from the 1960s to the early 1980s due to the diversification/ advancement of dietary habits with an increase of national income. However, the increase slowed down after that. Meanwhile, imports of meat, vegetables and their prepared products rapidly expanded from the latter 1980s. The shares of processed products and half-processed products have also expanded.
  4. Japan's agricultural trade balance has constantly been in considerable deficit, indicating \4.4 trillion in 1998.Japan has been the world's top net importer of agricultural products since 1984. 
  5.  Japan depends on more than 80% of the amount of import of major agricultural products such as grains from two countries including the US.Thus, it implements measures to secure stable import by, for example, setting the target annual transaction quantity between major exporting countries.Also, in international conferences etc., Japan claims the importance of stable food supply to exporting countries from the standpoint of a food-importing country.
  6. In order to secure stable food imports, it is necessary to promote food diplomacy, establish systems to collect information, and diversify the countries from which food is imported. Meanwhile, it is also necessary to control and operate the stockpile system of major foods, adequately and efficiently.Particularly, in the next round of WTO negotiations, it is important for Japan to actively claim the importance of food security from the standpoint of the world's top net importer of agricultural products.

    Table 1: Changes in Japan's top-10 imported agricultural products (value terms)
      1960 1970 1980 1990 1995 1998
    1st wheat corn corn corn pork tobacco
    2nd soybeans soybeans soybeans beef beef beef
    3rd raw sugar wheat wheat  alcohol beverages tobacco alcohol beverages
    4th corn raw sugar raw sugar pork corn pork
    5th tallow grain sorghum coffee beans tobacco alcohol beverages corn
    6th rice bananas grain sorghum soybeans soybeans soybeans
    7th copra tobacco beef wheat wheat wheat
    8th milk powder
    (skimmed)
    coffee beans pork rapeseed chicken coffee beans
    9th tobacco tallow tobacco chicken coffee beans chicken
    10th bran ram alcohol beverages coffee beans fresh vegetables fresh vegetables

     

(2)Past Course of Japan's Agricultural Negotiations

  1. Following repeated negotiations extending over almost half a century from the accession to GATT in 1955, Japan's border measures for agricultural products have completely converted to ordinary tariffs after the tariffication of rice and rice products in April 1999. The current tariff levels have also been established through the negotiations.
  2. Japan maintains border measures as high as possible for important agricultural products which should be produced domestically. Concerning items for which demand cannot be satisfied by domestic production alone, Japan makes efforts to improve market accesses by abolishing the import restrictions and lowering the tariff rate with due consideration to the requests of foreign countries.
  3. Past course of negotiations on agricultural products in main rounds of negotiations

a. Kennedy Round (1964-1967)
Japan lowered tariffs on a little over 50% of all tariff-imposed items of agricultural, forestry & aquatic products (270 items, 28% of the amount of import of such products in 1974).

b. Tokyo Round (1973-1979)
Japan agreed to sequentially expand the import quotas for beef and citrus fruits until fiscal 1983, in negotiations with the US.Also, Japan lowered tariffs on approximately 200 tariff-imposed items (21% of the amount of import of agricultural, forestry & aquatic products in 1976) such as soybeans, rapeseed and bananas.

c. Japan-US agricultural negotiations
The US claimed that Japan should abolish the import restrictions of beef and citrus fruits.It was agreed that the import quotas would be sequentially expanded between fiscal 1984 and fiscal 1987 in the 1984 negotiations, and that import restrictions would be abolished from April 1991 in the 1988 negotiations.
Out of 12 items including a part of dairy products and starch, Japan's restriction on import volumes of 10 items excluding peas/beans and peanuts were judged as breaching GATT.Therefore, in 1988, an agreement was reached to abolish the restriction on import volumes of these 10 items, including processed cheese.

d. Uruguay Round (1986-1993)
Negotiations were made concerning the lowering of protection levels in three fields: border measures, support to domestic production and export competition.
Japan aggressively claimed against the introduction of comprehensive tariff measures, but since most countries supported the introduction, Japan accepted an adjusted proposal that admits special tariff measures for agricultural products that satisfy certain requirements.

Table-2: History of Japan's agricultural trade negotiations 
Year Major events Major items subject to abolition of
the quantitative restriction on imports (Note)
1955 Accession to GATT Rye, coffee beans, cocoa beans
Soybeans, ginger

Mutton, onions, eggs, chicken, garlic
Peanuts, bananas, raw sugar
Rush, lemons
Cocoa powder
1960 Import liberalization of 121 items
1961 Decision of basic policy for the liberalization of trade and exchange
1962  
1963 Shift to Article 11 Nation of GATT
1964  
1966  
1967 Settlement of the Kennedy Round (1963-)
1970  

Pork fat, margarine, lemon juice

Grapes, apples, grapefruits, beef, pork, black tea, rapeseed

 

 

Compound feeds, ham/bacon, refined sugar

 

Malt
Canned ham/bacon

1971  
1972  
1973 Export control of US soybeans etc.
1974  
1978 Agreement reached in the Japan-US agricultural negotiations (beef/ citrus fruits)
Settlement of the Tokyo Round (1973-)
1984 Settlement of the Japan-US agricultural negotiations (beef/ citrus fruits)
Comprehensive economic measures

 

 

Prepared products of pork (partial)
Grapefruit juice

 

 

Garbanzos

 

Processed cheese, tomato ketchup sauce, tomato juice, prepared products of beef and pork

1985 External economic measures
1986 Start of the Uruguay Round
Action program
1988 Agreement reached in the Japan-US agricultural negotiations (beef/ citrus fruits, 12 items)
1989

 

 

1990  

Fruit puree paste, canned pineapples, non-citrus juice

Beef, oranges

Orange juice

 

 

Wheat, barley, dairy products (butter, skimmed milk powder, etc.), starch, peas and beans, peanuts, elephant's foot, raw silk/cocoons
Rice

1991 Presentation of the Dunkel Draft
1992  
1993 Settlement of the Uruguay Round (1986-)
1995 Execution of the Uruguay Round agreement
1999  
2000 Start of the next round of WTO negotiations

(Note) Only the representative items are listed. Some of the items are not referred to by the names stipulated in the international treaty on product classifications, but by general names.

(Reference) 12 items in the Japan-US agricultural negotiations:
[1] processed cheese, [2] fruit puree paste, [3] fruit pulps, canned pineapples, [4] non-citrus juice, [5] processed products of tomato (tomato juice and tomato ketchup sauce), [6] glucose, lactose, etc., [7] prepared food products of which main ingredient is sugar, [8] dairy products such as powdered sugar and condensed milk, [9] starch, [10] peas and beans, [11] peanuts, and [12] prepared products of beef and pork.

(3)Implementation of the Uruguay Round Agricultural Agreement

  1. In the Uruguay Round agricultural agreement, it was agreed to make specific and binding commitments in the following three fields: border measures, support to domestic production and export competition. These commitments are to be realized over a period of six years from 1995 through to the year 2000. Japan has been steadily executing this agreement since 1995 by establishing related domestic laws and ordinances.
  2. With regard to border measures, all non-tariff measures such as quantitative restrictions on imports were shifted to tariff measures in principle, and the tariff equivalent (difference between the domestic wholesale price and the import price) was established. The bound rates (including the tariff equivalent) of all agricultural products including those resulting from tarrification are to be reduced by 36% on a simple average basis over the six-year period (at least 15% per item).
  3. The “market access opportunities,” set on the basis of import results during the reference period (1986-1988) or of the import quotas, are maintained or expanded for tariff-imposed items.
    For the event that there was more than a certain amount of increase in the import volume or a reduction in the import price, a special safeguard scheme is introduced by which an additional tariff can be imposed without compensation.
  4. With regard to rice, taking into account the non-trade-concern, a special tariff measure was adopted by accepting heavier-weighted minimum access opportunities compared to the general tariff imposition.
    From April 1999, it was shifted to the general tariff measure. Because, by doing so during the execution period of the agreement, the increase of the amount of minimum accesses can be reduced to a half, and also, if Japan persists in maintaining the special tariff measure which is only adopted by an extremely small number of countries, it may not be able to gain the support of those countries with which it should coordinate in the next round of the WTO agricultural negotiations.
  5. With regard to policies subject to reduction (“yellow” policies) in the support to domestic production, 20% of the total amount of support during the reference period that was calculated by the aggregate measurement of support (AMS) is reduced by the same ratio annually over the implementation period. Japan's AMS (fiscal 1996) is not only lower than the committed level for fiscal 1996, but already 16% lower than the committed level for fiscal 2000.
    Table 3:Outline of the Uruguay Round Agreement on Agriculture
    Classification Measures Promised implementation method (For six years)
    Border measures Tariffs Average 36% reduction on all agricultural products
    (minimum 15% reduction for each item)
    Quantitative import restrictions
    (non-tariff barriers)
    In principle, all quantitative import restrictions are converted to tariff equivalents (tariffication) and reduced in line with tariffs.
    Domestic supports Market price supports, Deficiency payments and
    others
    20% reduction of Aggregate Measure of Support (AMS)
    Export competition Export subsidies 36% reduction in value and 21% in volume

    (Note) Japan has no policy equivalent to import subsidy.

    Table 4: Outline of New Import Systems for Items with Tariff
    Item Previous border
    measures
    Border measures introduced with tariffication measure
    Basic framework of
    border measures
    Market access opportunities Tariff  equivalents
    (1995-2000)
    Basic framework of
    border measures
    Applicable
    tax rate
    Import mark-up caps
    (1995-2000)
    Rice Quantitative
    import restrictions
    [Beforetariffication]
    Quantitative import
    restrictions and State
    Trading System
    379,000t → 758,000t No tariff 292yen/kg (no reduction) Tariffication special treatment
    [After tariffication]
    State Trading System
    (1999-2000)
    643,300t → 682,200t
    No tariff 292yen/kg (no reduction)

    (1999-2000)
    351.17yen/kg→341yen/kg

    Wheat
    And Barley
    Quantitative
    import restrictions
    State Trading System Wheat
    5,565,000t→5,740,000t
    No tariff 53yen/kg→ 45yen/kg 65yen/kg→ 55yen/kg
    Barley
    1,326,500t→1,369,000t
    No tariff 34yen/kg→ 29yen/kg 46yen/kg→ 39yen/kg
    Dairy
    products
    Quantitative
    import restrictions
    State Trading System for
    some items



    Tariff quota system for
    private trades
    Livestock Industry
    Promotion
    Corporation
    137,000t→137,000t
    (in terms of raw milk)
    Skimmed
    milk powder
    25%
    358yen/kg→ 304yen/kg 466yen/kg +25%
    → 396yen/kg +21.3%
    Private trades
    (school lunch program, feeds and other)
    Skimmed milk powder
    93,000 t →93,000 t
    Butter
    1,900t→1,900t
    (Others)
    125,000t→125,000t
    Butter
    35%
    950yen/kg→ 806yen/kg 1,159yen/kg +35%
    → 985yen/kg +29.8%
    Starch Quantitative
    import restrictions
    Import quota system 157,000t→157,000t 25%   140yen/kg→ 119yen/kg
    Miscella- neous beans Quantitative
    import restrictions
    Import quota system 120,000t→120,000t 10%   417yen/kg→ 354yen/kg
    Peanuts Quantitative
    import restrictions
    Import quota system 75,000t→75,000t 10%   726yen/kg→ 617yen/kg
    Elephant's foot (kon- nyaku imo) Quantitative
    import restrictions
    Import quota system 267t→267t 40%   3,289yen/kg→ 2,796yen/kg
    Raw silk
    and cocoon
    Other import
    restriction
    Raw silk -
    State Trading System
    798t→798t Raw silk
    7.5%
      8,209yen/kg →6,978yen/kg
    Cocoon -
    Tariff quota system
    Cocoon
    140yen/kg
      2,968yen/kg →2,523yen/kg
    Pork Differential
    Duty System
    - Conversion to tariff equivalents and 15% reduction of basic import price(482.5yen/kg in 1993 for dressed carcass)
    - In addition to special safeguard measures, emergency adjustment measures will be introduced to raise break-even price in response to rapid growth of imports.
    - No access volume established.

    (Notes)
    1. Only representative figure of tax rates, import mark-up and tariff equivalents were shown here if there are more than two within a corresponding classification.
    2. Figures of rice, wheat, dairy products, starch and pork include those of prepared products.
    3. Simultaneous Buy and Sell System (SBS) is adapted to some of imported rice and whey powder.

(4)Counterargument to Major Countries' Report Concerning Japanese Agricultural Trade Policy

  1. Report on Foreign Trade Barriers (Office of the US Trade Representative, 1999)
    Outline of description on Japanese agricultural policy Counterargument and comments
    Variety-specific quarantine system of plants:
    Under the current system, some products are banned from import without sufficient scientific basis.

    Plant quarantine is conducted on a scientific basis in order to prevent introduction of pests and diseases from foreign countries.
    Expansion of rice imports:
    Continuous entry into Japanese market of US rice industry is required even after the introduction of tariffication.

    It is of an importance fundamentally, should US wish to expand rice export, that further efforts are made in varieties development of rice in response to demand in Japan's market, and in competitions among exporting countries in terms of qualities and prices of rice.
    Biotechnology (GMO labeling):
    USTR asks for Japan not to develop any unnecessary and inappropriate rule of labeling for Genetically Modified Organisms, which could disturb the progress of gene recombination technology.

    Considering consumer interests, Japan will develop and implement rational, credible and feasible labeling rules.
  2. Canada's International Market Access Priorities (Department of Foreign Affairs and International Trade, 1999)
    Outline of description on Japanese agricultural policy Counterargument and comments
    Elimination of tariffs on canola oils (cooking oils)
    Although, as the result of the Uruguay Round (UR) negotiations, the tariffs on canola oils were drastically reduced, they still limit imports, thus, making Japanese oilseeds crushers more advantageous than crushers overseas.

    Japan is not in a position to accept further tariff reduction, since we are committed to drastically reducing tariffs of agricultural products by the year 2000 (36 percent reduction from the base rate).
  3. General Characteristics of Working Paper on Trade with Japan and Trade Policy :Japan (EU Committee, 1999)
    Outline of description on Japanese agricultural policy Counterargument and comments
    Import system of pork:
    Japanese emergency tariff measures for pork caused severe market dislocation. As long as the said measure is effective, pork from EU is eliminated from Japanese market.

    Emergency tariff measures are consistent with the WTO Agreement. What is important is the steady implementation of the UR Agreement, and there is no further plan to review this.
    The said measures are applied equally to any exporting countries.
    Quarantine system of animals and plants:
    Japan does not recognize the existence of an EU single market and does not yet apply regionalism.

    At present, it is important for experts on both sides to exchange opinions on regionalism.
  4. Trade Negotiations, Trade Outcomes and Objectives Statement (Department of Foreign Affairs and Trade of Australia, 1999)
    Outline of description on Japanese agricultural policy Counterargument and comments
    Rice:
    Australia asks Japan to review import periods, pricing, distribution of rice. Thanks to improved distribution, Japanese consumers may now obtain new rice twice a year.

    Bidding periods and volumes of minimum access rice are determined for systematic import in consideration of domestic demand and supply as well as needs, not in terms of the harvest time in the southern hemisphere.
  5. Review of Trade Policy Evaluation System: Japan (World Trade Organization, 1998)
    Questions by Country concerning Agriculture Japanese Response
    Deregulation:
    Most agricultural items are excluded from deregulation items(EU, Korea)

    Abolition of government rice resale duty and expansion of quarantine services are implemented. Thus, such an allegation is unjustifiable.
    Tariff:
    Japanese tariff on agricultural products is still higher.(Hong Kong, Canada, New Zealand, U.S., Australia, Indonesia)

    Secondary tariff was established based on price differences between domestic and overseas market during the base period, according to the result of the UR Agreement. As for other items not subject to tariffication, required tariff reductions are also steadily being implemented according to the UR Agreement.

Chapter III  Agricultural Product Trade Policies in Major Countries and their Problems

(1)The United States 

  1. The main agricultural policies of the United States are implemented based on the Federal Agriculture Improvement and Reform Act of 1996 that has liberalized planting and introduced a Production Flexibility Contract Payment system, abolishing production adjustment and the deficiency payment system. Nonrecourse Marketing Assistance loan system remains, under which farmers can obtain loan at the commodity loan rate level based on a moving average of past market prices from the Commodity Credit Corporation, pledging the crop itself as collateral. With regard to trade barriers, import quantitative restriction measures and the surcharge system have all been shifted to a tariffication system in accordance with the UR agreement. 
  2.  Overview of individual trade policies and problems

a. Export subsidy policy
This is a system under which the US Government provides subsidies to importers of grains and dairy products. Under the current WTO arrangements, the government can grant export subsidies freely, as long as the total amount of such subsidies is within the government's reduction commitment under the Uruguay Round agreement. However, this may distort world trade.

b. Export credit guarantee programs for agricultural products
This is a system under which the Commodity Credit Corporation extends credit guarantees to developing countries importing US agricultural products on a commercial basis. This system not only has a trade distortion effect but is also a circumvention of providing export subsidies, as the CCC collects claims in case of default.

c. Export control system
This is a system to restrict exports of agricultural products and other products on account of a shortage of supplies on the domestic market, under executive orders based on the "International Emergency Economic Authorization Law." The system raises not only a trade distorting effect, but also difficulty on food security, which impedes stable food supply to the importing countries.

d. Farm Aid package based on the Omnibus Consolidated Appropriation Law for Fiscal Year 1999
A 6 billion dollar measure (decided in October 1998) to help farms suffering from economic losses caused by a decline in grain prices since 1998 and by natural disasters. The system is partially reported as part of "green policy." However, it is necessary to examine this in detail to clarify its consistency with "green policy." The system also runs counter to the Agriculture Act of 1996 that aims to establish market-oriented agriculture.

e. Export subsidies through sales subsidiaries overseas
This is a system under which a certain percentage of taxable income on exports of US products by overseas subsidiaries of US companies is deducted. In October 1999, the WTO determined that the system constitutes export subsidies and domestic product preference subsidies and called for its abolition by October 2000.

 

Table 5: Loan Rate of Major Agricultural Items     (Unit: Dollar/Bushel)
Fiscal year 1996 1997 1998 1999
Wheat 2.58 2.58 2.58 2.58
Corn 1.89 1.89 1.89 1.89
Soybean 4.97 5.26 5.26 5.26

 Note: Loan rate of wheat and feed grains can be reduced in line with inventory ratio at the authority of the Secretary of Agriculture.


Table 6: Payment under Export Enhancement Program     (Unit: million dollars)
Fiscal year 1994 1995 1996 1997 1998
Payment  1,151  339 5 0 2
Wheat 891 243 5 0 0
Wheat flour 78 27 0 0 0
Feed grains 100 17 0 0 1
Rice 2 5 0 0 0
Vegetable oils 30 0 0 0 0
Frozen pork 14 13 0 0 0
Frozen chicken 21 21 0 0 1
Hen eggs 15 13 0 0 0

Note: Feed grains include barley malts and barley.


Table 7: Results of Export Credit Guarantee Programs    (Unit: Million dollars)
 Fiscal year  1994 1995  1996  1997 1998
GSM-102 3,080 2,772 3,079 2,809 3,963
GSM-103 140 149 151 63 56

Table 8: Examples of Export Control of Agricultural Products
Period Description
June-September 1973 Banned or restricted export of soybean and soybean products
1974 & 1975 Export restriction of wheat to the Soviet Union and Poland
January 1980 Partial ban of exports of grains to the Soviet Union

(2)Canada 

  1. Agricultural policy is under the joint jurisdiction of the federal and provincial governments in Canada. Specifically, the governments implement management stabilization measures (safety net) such as the Net Income Stabilization Account (NISA) and crop insurance, and grains are exported through the Canadian Wheat Board (CWB). As for cross-border measures, import quantitative restriction measures on wheat, beef, dairy products, etc. were all shifted to tariffication.
  2. Overview of individual trade policies and problems

a. Export subsidies
Under the Uruguay Round agreements, Canada promised to reduce volume and expenditure of item-by-item export subsidies. A small amount of export subsidies were paid to butter and skim milk in fiscal 1996/97, but no export subsidy was granted in fiscal 1997/98.

b. Special milk class scheme for dairy products
Instead of subsidies to exporters, the "special milk class" scheme was introduced to a classified pricing system based on the end use of milk, for low-priced manufacturing milk used as process material for dairy products destined for exports. Producers are paid the pooled price of the milk price class and other class milk. This constitutes making up losses incurred in dairy product exports through domestic dairy product prices. A WTO panel determined in May 1999 that the system violates export subsidy rules.

c. Grain export through the Canadian Wheat Board
The Canadian Wheat Board (CWB) monopolizes collection and export of wheat and barley produced in the western plain provinces. Rules on state-run export trade enterprises are less strict than those on state-run import trade enterprises. For example, the former are exempted from reporting requirements. This raises problems as to the balance in rights and obligations between exporting and importing countries.

(3)The European Union

  1. The European Union implements such policies as market intervention, imposition of tariffs and direct payments. In addition, it also implements measures for farmers in less-favored areas and agri-environmental measures.
  2. Overview of individual trade policy and problems

a. Export refunds/export levies
The EU grants export refunds (or applies export levies) in view of the necessity to prevent wild fluctuations of prices within the EU market. The export refund is problematic in that it may distort world trade. Since the export levy is designed to ensure supplies and stabilize prices within the EU market, it raises problems as to the balance in rights and obligations between exporting and importing countries.

b. Export subsidies on processed cheese
The EU grants subsidies to skim milk and butter produced in the EU and has introduced a system to use them for processed cheese destined for export. This constitutes diversion of export subsidies to skim milk and butter to processed cheese. Therefore, it is a violation of its commitment to reduce export subsidy for processed cheese.

(4)Australia

  1. In agricultural policy in Australia, the federal government is in charge of international negotiations, quarantine of foods at the time of import or export, taxation and measures to cope with droughts. State governments are in charge of other policies. As to cross-border measures, all import measures have been shifted to tariffication. But measures on exports of wheat, rice and sugar remain solely controlled by public corporations or boards.
  2. Overview of individual trade policies and problems

Central control of wheat exports by Board 

The Australian Wheat Board had been the sole controller of the wheat export (More than 80% of Australian wheat is exported). However, on July 1, 1999 it was completely privatized as AWB Ltd., with wheat producers as its stockholders. Following privatization, sole control of the wheat export was transferred from the AWB to the Wheat Export Agency (WEA), which was established by the "Wheat Distribution Act of 1998." However, the WEA has consigned its export operation to AWB Ltd. Just as in the case of the Canadian Wheat Board, this raises problems as to the balance in rights and obligations between exporting and importing countries.

(5)Problematic trade policies in other foreign countries 

In the Czech Republic an export permit is required to export wheat, etc. Its issuance is determined based on forecasts of amount of production and domestic demand. Therefore, it can be restrictive, in that an issuance quota for export permits may be applied in cases of serious supply shortage or market confusions. Hungary's corn export system gives rise to a similar problem.

(6)Cases of agricultural trade conflicts between foreign countries 

  1. US-EU dispute over hormone-treated beef

a. The European Union imposed a total import ban on beef produced with growth hormones in January 1989, to protect consumers' health. In January 1996, the US, contending the ban is not consistent with the GATT and SPS agreements, called for discussions based on the agreements and, in May the same year, a WTO panel was established.

b. In August 1997, the Panel reported that the EU regulation did not conform to existing international standards and that it constituted discrimination or a disguised restriction in international trade. Therefore, the Panel recognized that the ban was inconsistent with the SPS agreement.

c. In protest to this judgement, the EU appealed to the DSB Appellate Body. In January 1998, the DSB Appellate Body reported that the EU measure did not constitute discrimination or a disguised restriction against international trade.
However, the Appellate Body agreed with the Panel that the EU regulation was not warranted by a sufficient risk assessment.

d. The EU measure should have been made consistent with WTO regulations by May 13, 1999. However, the EU refused to withdraw the measure despite the deadline, prompting the US to raise tariff rates on specific imports from the EU (34 items, mainly agricultural products) in and after July the same year.

  1. US-EU Banana Conflict

a. The European Union implemented measures to give preferential treatment to ACP (Africa, the Caribbean and Pacific) countries, former European colonies, in its imports of bananas.

b. Upon complaints made by domestic banana companies in pursuant to the US Trade Act, such as Article 301, the US, contending that the measure was having adverse effects on the US economy, started discussions under the GATT with Central and Latin American countries. A WTO panel was established in May 1996.

c. The Panel report submitted in May 1997 recognized that the EU, which extended preferential treatment to traders of bananas produced in ACP countries, discriminated against third-country distributors and therefore was inconsistent with WTO agreements. The EU appealed the ruling to the DSB Appellate Body, but the latter's report basically supported the previous Panel report.

d. In October 1998, the EU introduced a new system and implemented an additional import quota for relevant countries. However, the US contended that the EU practice of issuing import permits based on past performance means that EU traders dealing in ACP-produced bananas are still given preferential treatment and that this practice therefore does not constitute the implementation of the WTO recommendation. In March 1999, the US raised tariff rates on specific imports (17 items, including handbags) from the EU.

  1. US-Australia/New Zealand conflict over lamb imports

a. Imported lamb accounts for about 20% of total supply in the US, most of which comes from Australia and New Zealand. Australian and New Zealand lamb are therefore the main competitors in the US lamb market.

b. In October 1998, the US lamb industry alleged that a sharp increase in imports of Australian and New Zealand lamb lowered lamb prices, seriously damaging the domestic industry. The industry called for imposition of safeguard measures, in the form of import volume restriction and higher tariff rates.

c. International Trade Commission (ITC), a US independent investigative organization, began examination of the matter and in February 1999 judged that the sharp increase in lamb imports was in effect the cause of the significant damage to the domestic industry. The President initiated a safeguard measure, in the form of a tariff-rate quota for three years starting in July 1999.

d. In response to the imposition of the safeguard measure, Australia and New Zealand requested the establishment of a panel under GATT in July 1999.

  1. Genetically Modified Plants

a. Safety
The EU Council on Environment, at its meeting in July 1999, agreed to revise the EU directive, which sets forth the approval procedures for genetically modified plants, to tighten rules concerning safety. Of the 15 EU member countries, 12 declared that they would not approve new genetically modified plants until the revision is implemented. The US complained that the EU's actions were politically motivated and that the opposition from environmental protection groups had no scientific basis.

b. Labeling
In 1997, the EU took the decision to make labeling of genetically modified foods mandatory. (This is yet to be implemented due to the lack of specific details for implementation.) The US, insisted that labeling should be made mandatory only when significant changes are observed in the ingredients of genetically modified foods, compared with existing foods. It also criticized the mandatory labeling as a trade barrier, in view of the large amount of cost involved in separate management and inspections. In response, the EU insisted that even if safety is scientifically ensured, labeling should be implemented in the interest of consumers and from an ethical point of view.

c. The safety and labeling of genetically modified foods is now being studied by forums such as the Organization for Economic Cooperation and Development (OECD), CODEX (a joint food standard commission of the Food and Agriculture Organization and the World Health Organization), and the Technical Barrier to Trade (TBT) Commission of the WTO.

Chapter IV   Proposals of Japan on the Upcoming WTO Negotiations

  1. The Japanese Government accepted the agreement on agriculture reached at the Uruguay Round negotiations and has made utmost efforts toward its implementation. 
  2.  The Japanese Government considers that the existing WTO agreements are reasonable to a certain extent, but also that it is not sufficient in terms of fair and equitable trade rules for both food importing and exporting countries, as well as for developed and developing countries.
  3. The next agricultural negotiations under the WTO, which begins in early 2000, is extremely important, in the sense that the direction of world agricultural trade rules for the 21st century will thereby be fixed. It is also extremely important to achieve results in the negotiations that fully reflect Japan's ideas, such as stable food supply based on the expansion of domestic agricultural production, as called for in the recently enacted Food/Agriculture/Farming Village Basic Law, and demonstration of the multi-functional role of agriculture and farming villages. It is also important to address new problems such as food safety, including that of genetically modified organisms.
  4. In view of the above, it is important to redress the balance of rights and obligations between exporting and importing countries, and promote the smooth conversion to market-oriented policies by individual countries, including Japan, while maintaining the basic framework of the existing WTO agreements. It is necessary to make thorough examination based on the past experiences of implementing the agreement.
  5. In respect of this, the Ministry of Agriculture, Forestry and Fisheries intensively explained "Fundamental Position of Japan on the Upcoming WTO Negotiations on Agriculture, Forestry and Fishery," drawn up in late April 1999, at meetings with consumer and business groups and provided information to the public through its Internet homepage. Various discussions are also being held in the Diet.
  6. Based on the discussions, the Ministry drew up "Proposal of Japan on the Upcoming WTO Negotiations" in late June 1999 and submitted this to the WTO. The ministry will continue to provide explanations and information to parties concerned, and, based on discussions in various sectors, will take part in the negotiations while making efforts to form a national consensus.

Proposal of Japan on the Upcoming WTO Negotiations Negotiations on Agriculture

Objectives

  1. The objectives for the next agricultural negotiations are to establish a set of rules and disciplines that are genuinely fair and equitable for both food importing and exporting countries, as well as for developed and developing countries, and which allow a coexistence of the various types of agriculture among Members.
  2. The following should be ensured in such rules and disciplines:

a. that due consideration be given to the importance of the multi-functionality of agriculture, as well as allowing for a smooth implementation of the domestic agricultural policies and to the differences in natural conditions by taking into consideration the historical background of agriculture of each Member;

b. regarding food security, which can be considered as one aspect of multi-functionality, that due consideration be given to the fact that domestic agricultural production is a basis for food security, by taking into account the instability of food supply/demand in the international market and the problems of starvation/malnutrition in developing countries;

c. to redress the imbalance in rights and obligations under the WTO rules between exporting and importing countries.

Main points to be addressed

  1. In pursuing these objectives, WTO Members should agree to:

a. strengthen the existing rules and disciplines on export prohibition/restriction measures, export tax, export subsidies and export state trading enterprises, with a view to redressing the imbalance of rights and obligations between exporting and importing countries; and

b. review the existing rules and disciplines of the Agreement on Agriculture while maintaining its basic framework. Such a review should take account of the experiences obtained during the implementation of the said Agreement, and facilitate a reform process for market-oriented approaches in agricultural policies undertaken by Members.

  1. Special consideration should be paid to developing country Members in accordance with their situations and needs, in order to, among others, facilitate a smooth implementation of their obligations under the WTO rules and to achieve food security.
  2. WTO Members should actively address such new issues as the treatment of genetically modified organisms (GMOs).

Forums for negotiations

  1. An independent group for agricultural negotiations should be set up in the next WTO trade negotiations in light of the particular characteristics of agriculture, which requires WTO Members to consider a wide range of issues, such as domestic support, border measures and export rules, in a comprehensive manner. Negotiations on those issues should be pursued comprehensively and effectively in such a group.
  2. An appropriate forum should be established to address new issues, including GMOs, from a broad perspective. Work in such a forum should include an analysis of the current situation, identification of the questions to be dealt with, as well as the relationship between such questions and the existing WTO rules and disciplines.

contact

大臣官房国際部国際経済課WTO等交渉チーム
ダイヤルイン:03-3502-8057
FAX:03-3591-6765

Top of Page