Wednesday, September 14, 2005

How Japan is dealing with WTO?

In short, accomodated farmers in others jobs.

Looking at Japan, Japan used the same argument that its rice was a unique product with cultural and sentimental value as well as an economic one. It is not like automobiles or television sets. The whole country must produce rice at any cost and rice farmers should be protected at all costs. The dates are different, but Japan went through similar negotiations and similar time schedules to delay the opening of its rice market.

Japan did open its rice market and did it ahead of schedule. Before the set date that its MMA should be 8 percent, Japan imported more than 8 percent. Japan used a so-called tariffication by calculating the required tariff rates to make sure the necessary MMA would be satisfied. Japanese rice farmers and more importantly Japanese policy makers must have realized that Japan could not compete in rice production in the global economy. In order to sell more of its automobiles and electronics, Japan asked foreign countries to open their markets for those products in exchange for it opening its rice market. Though domestic rice farmers suffered, it was not a bad strategy.

Many rice farmers suffered and left rice farming for good. Although less rice was produced, the price of rice went down in Japan because of increasing imports and reduced price support by the government. The gap between domestic and world rice price has been going down steadily. Of course the Japanese government helped rice farmers get other jobs and supplemented their income. Japan correctly anticipated and realized that the country would be better off in the long term by abandoning its uncompetitive rice farming.