Japan, the EU and Agriculture

John de Boer (GLOCOM Platform)

In the absence of a major breakthrough, the EU and Japan will sabotage a WTO brokered plan to reduce and eventually eliminate export subsidies and domestic supports for agriculture by 2005. The EU and Japan have never been more united than on the issue of farm trade liberalization, leaving many experts worried that they will "effectively kill the Doha round" (former Mexican President Ernesto Zedillo in Forbes Magazine, 16 January) by persisting in their common position that restricts market access and distorts prices. Unfortunately, the consequences of their agricultural policies go beyond the failure of another WTO round. Numerous studies have shown that these subsidies not only deprive farmers of a minimum income in developing countries but also fail to protect the most vulnerable farmers in their own constituencies. In advance of the 31 March deadline to reach an agreement that could salvage the plan, governments from Latin America, development NGO's and media sources are calling on the two countries to do more.

So far, Japan and the EU have agreed to reduce tariffs to an average of 36 percent or as low as 15 percent on some items; to lower overall subsidies by 55 percent and decrease the value of export subsidies by 45 percent. In addition to this, according to the agricultural reforms introduced on 16 December 2002 by the European Agricultural Commissioner, Franz Fischler, the EU will break the link between production and output (de-coupling), reduce guaranteed prices for cereals, and cut direct payments to farmers by 1 percent from 2006 to 2012. Brussels considers this an "ambitious" policy that demonstrates the EU's willingness to "do its part" so that developing countries can gain "real benefits from the North" (EU Press Release, IP/02/1892, 16 December 2002).

The Japanese Agricultural Minister, Tadamori Oshima, declared Japan's support for this EU proposal on 31 January. The Yomiuri Shimbun quoted him as stating that Japan and the EU would form a strong coalition in order to oppose "unrealistic proposals made by the US and others" (31 January). Mid-last year the US promised to decrease overall tariffs to 25 percent across the board and eliminate export subsidies and trade distorting domestic support measures in five years. According to Japanese news sources, the EU plan was welcome because it allowed Japan to continue to protect rice which until recently maintained a 1,000% tariff (see Yomiuri article and Weekly Review #2).

The fear in both Europe and Japan is that their farmers will be unable to compete in a free and fair trading environment. The two countries have lobbied behind arguments for "food security" and "multifunctionality", however, the fact is that heavily subsidized agricultural produce such as rice in Japan and sugar, milk and cereals in Europe are plagued by overproduction (see Weekly Review #2). Furthermore, according to a study conducted by Oxfam International, the main beneficiaries of EU subsidies are not small farmers but big agri-businesses and rich land-owners. The latest statistics (2000) indicate that 78 percent of EU farmers receive less than 5,000 Euro a year while less than 2,000 of Europe's 4.5 million farmers got 1 billion Euro in direct aid under the Common Agricultural Plan (Oxfam International, "Stop the Dumping!", 2002). In Japan, between 1995 to 2000, the number of small farms cultivating less than 2ha decreased by 35.7% while the number of large farms grew by 42.9%. (The 2000 World Census of Agriculture and Forestry' Summary, MAFF, Japan, 30th November, 2000).

Japan and the EU were singled out for unfair agricultural practices by Peruvian President Alejandro Toledo during his speech at the World Economic Forum last month. He argued that, "Europe, the US and Japan cannot ask us to open our markets while they spend US $1 billion a day to subsidize their agriculture" (Naomi Koppel, AP, 24 January). The Brazilian Minister of Industry and Development has stated that these policies are making farmers in the developing world, "poorer and poorer because of overproduction and depressed international prices" (Naomi Koppel, AP, 24 January).

Considering these costs and the fact that Japanese and EU subsidies are not getting to those who need them most, the time has come for both to re-consider. While EU-Japanese collaboration is welcome in principle, it is a shame that it has to come at the expense of poor farmers.

Articles:

• Ernesto Zedillo, "Will the Doha round implode in 2003", Forbes Magazine, 16 January 2003
• "Japan backs EU farm trade proposal ahead of WTO talks", The Associated Press, 31 January 2003
• "Japan Ag. Min: EU Farm Talks Proposal Worth Mulling - Kyodo", Down Jones, 27 January 2003
• Naomi Koppel, "Rich countries must cut farm subsidies if they want more trade, Latin American politicians say", The Associated Press, 24 January 2003
• Alex Kirby, "EU Farm shake-up plan saddens Greens", BBC, 23 January 2003
• European Commission Press Release, "WTO and Agriculture", IP/02/1892, 16 December 2002
• "Nougyoubutsu Hikisageritsu, EU An Shiji wo Nousou ga Seishiki Hyoumei", Yomiuri Shimbun, 31 January 2003
• Oxfam Briefing Paper, "Stop the Dumping!: How EU agricultural subsidies are damaging livelihoods in the developing world", 2002.