Japan will take part in trade talks, PM Noda says
By Chico Harlan,
TOKYO — Prime Minister Yoshihiko Noda announced Friday that Japan will participate in talks on a broad, U.S.-backed Asia-Pacific free trade agreement, a divisive move that could aid an ailing economy and fracture the government’s ruling party.
By joining negotiations on the Trans-Pacific Partnership (TPP), Japan would clear the way for potentially major changes to its economy, the world’s third-largest, such as slashing tariffs, allowing cheaper imports and lowering prices for consumers.
But the pact also threatens to level Japan’s farming industry, whose many powerful advocates say that Noda is threatening national unity, and ultimately eroding his base of support, by making big decisions on his own.
Japan’s involvement in the talks marks a boost for President Obama, who set a goal of doubling U.S. exports over five years, and helps Washington strengthen its ties to Asia. Noda and Obama will discuss the pact when they meet Saturday during the Asia-Pacific summit in Hawaii.
Nine countries are a part of the agreement. But Noda said Japan must first “collect information” before it can unequivocally agree to be the 10th.
“I’ve decided to start discussions with related countries toward joining TPP negotiations at the Asia-Pacific Economic Cooperation summit in Honolulu,” Noda said at a news conference. “I believe joining the talks would serve our national interest.”
By deciding to join talks on the pact, which would eliminate all tariffs over 10 years, Noda offered clear proof of his top priority: reviving Japan’s battered economy. This country’s major exporters, burdened by a strong yen and confined by an aging and shrinking domestic market, have been begging for help in recent months. The trade pact would give them access to new markets, free of trade barriers, and help them compete in the face of South Korea’s recent free trade agreement with the United States.
“As an export-led nation, Japan has been prosperous,” Noda said. “But in order to pass that prosperity to the next generation, Japan has to capitalize on the growing power in Asia.”
Noda had promised weeks ago to make a decision on the pact before leaving for Hawaii. But Japan approached the self-imposed deadline with little clarity. Parliamentary deliberations never gained momentum, and a government advisory panel was too deadlocked to give Noda any advice.
About half the ruling Democratic Party of Japan favored participation in the pact. The rest attended pro-agriculture rallies, signed petitions and talked about farmers losing their jobs.
Much as Japan favors consensus, Noda made his announcement Friday without anything even close to one. The free trade pact, according to government figures, would lift Japan’s gross domestic product by $34.7 billion, or 0.54 percent. Consumer prices of rice would drop 39 percent. But farmers would lose a commanding portion of their business, and Japan’s food self-sufficiency would drop from 40 to 14 percent.
Japanese farmers account for just 1 percent of the GDP, but they hold disproportionate power, with an electoral system weighted in favor of rural areas. When negotiating previous free trade agreements, Japan was able to work out exceptions that protected its farmers, allowing the country to maintain a 778 percent tariff on rice and a 350 percent tariff on butter.
This pact is different because it allows little, if any, room for exceptions. The deal started five years ago as a small-scale arrangement among Singapore, Brunei, Chile and New Zealand. It has since widened to admit five more countries, including agriculture giants Australia and the United States.
Japan’s agriculture sector has little chance of competing with imports from those countries, largely because its farmers maintain tiny plots of land. Many of them work only part time. The average Japanese farmer is 66, and many say they have no younger family members who are willing to take over.
Noda has proposed a restructuring plan under which farmland will be consolidated, with more land going to fewer farmers.
Even the targeted tenfold increase in the size of the average rice paddy — up to to 75 acres — is still far shy of the acreage worked by the average U.S. or Australian rice farmer. But farmers here will be helped by Japanese consumers, who say domestic rice is stickier and sweeter than foreign rice — and worth a higher price.
Japan had debated for more than a year whether to join the TPP. But discussion was paused for several months after the March 11 earthquake-tsunami-nuclear triple disaster that devastated the country’s northeastern coastline. Japan is still struggling to reconstruct the region, which depends heavily on fishing and farming; opponents of the trade pact say it would make the rebuilding effort even more difficult.
“People [in the disaster area] might question why they should restore their farmland when they know their business will be beaten by their foreign competitors,” said Nobuhiro Suzuki, a professor of global agriculture sciences at the University of Tokyo.
The Democratic Party of Japan came to power in 2009, helped in part by policies that catered to small farmers, despite its members’ long-standing differences on trade liberalization. Noda, its third prime minister, came to office saying he hoped to mend party rifts. Friday, he reached out to both sides.
“As for TPP, I am fully aware of both great benefits and numerous concerns,” he said. “I love Japan from the bottom of my heart. My mother’s family are farmers. . . . I still remember the smell of the soil.”
Special correspondent Ayako Mie contributed to this report.