Japan in Their Own Words (JITOW)/日本からの意見

Japan's Commercial-Industrial Sector Poses Greater Obstacle to Trade Liberalization than the Agricultural Sector
GODO Yoshihisa / Professor, Meiji Gakuin University

September 7, 2011
In Japan, the commercial-industrial sector poses a greater obstacle to trade liberalization than the agricultural sector – such is my analysis, and many readers will no doubt be surprised. For many years, whenever the discussion turned to liberalizing trade, the typical equation depicted the agricultural sector as the opponent and the commercial-industrial sector the proponent of liberalization. This was particularly the case during the Uruguay Round talks that took place towards the end of the 1980's and through the early 1990's. The agricultural sector represented by the Japan Agricultural Cooperatives (JA) opposed liberalization fearing an influx of cheap agricultural imports. Meanwhile, the commercial-industrial sector represented by the Keidanren (Japan Business Federation) and Doyukai (Japan Association of Corporate Executives) supported liberalization as they sought new avenues of growth through exports. This led to a fierce debate between the two camps. That image seems to have stuck in people’s minds, and there are still many who believe that progress in liberalization would come if we could only silence the JA.

Nearly two decades have passed since the Uruguay Round talks, yet Japanese agriculture remains weak in international competition. Therefore, JA officials will continue to voice their opposition to liberalization when confronted by a microphone. However, JA no longer has the political clout it wielded in the past.

In the past, a formidable bond existed between the Ministry of Agriculture, Forestry and Fisheries, the JA and the Liberal Democratic Party (LDP). But the series of electoral reforms including the introduction of the single-seat constituency system eroded JA's influence. Its organizational clout has diminished considerably over the past few years as the LDP left its seat of power and the Lehman Shock dealt a direct blow to JA's financial operations.

Though we make casual reference to "farmers" only a handful of them actually work the land full-time. Such farmers, anticipating the coming era of trade liberalization, have already taken measures such as raising quality to differentiate their products. Meanwhile, micro-farmers who make up the majority have secured other means of earning a stable income, and are no longer dependent on agriculture. Thus, when farmers and the JA express their opposition to trade liberalization, they only do so half-heartedly. For the most part, their real motive seems to be to elicit as much government funding as possible by showing their resistance.

Likewise, although the commercial-industrial sector publicly seeks liberalization, it does so without the intensity of the past. The Upper House election in 2009 was symbolic of this change. The Democratic Party of Japan, which had been in favor of Free Trade Agreements (FTA) until then, adopted a passive posture to win votes from farmers. Yet the move evoked a muted reaction from the commercial-industrial sector, which offered only a token objection.

The level of global aspirations differs among companies in the commercial-industrial sector. Companies with a strong global orientation have already moved away from Japan by transferring their manufacturing bases overseas, and are less attentive to Japanese government policy on issues including trade. As a consequence, companies that depend on domestic demand that are less globally-oriented have increased their influence on political lobbying conducted by the commercial- industrial sector.

Furthermore, such commercial-industrial companies dependent on domestic demand are seeking closer collaboration with farmers and the JA. In concrete terms, such collaboration includes processing local agricultural products and developing them into local specialties and green tourism. Such efforts are known as "agri-commercial-manufacturing collaboration," or the "sixth industry" – a term coined as a slogan to signify the convergence of the primary, secondary and tertiary industries in a region, and is also explained as "1+2+3=6." The Ministry of Agriculture, Forestry and Fisheries and the Ministry of Economy, Trade and Industry are handing out subsidies to such collaboration. Today, the agricultural sector and the commercial-industrial sector have become birds of a feather, in the sense that they seek government protection as "well-meaning underdogs" striving to save local jobs.

In the days of the Uruguay Round talks, Japan's commercial-industrial sector was proud of its international competitiveness, and corporate leaders spoke of their ambitious plans for the global market. Today however, that same sector has completely lost its competitive edge in the face of vigorous challenge from emerging countries such as India and China. No longer able to entertain their global reverie, some Japanese business leaders have instead turned to the nostalgic dream of taking up farming. Such is the background of the current "agriculture boom," in which active moves are being made to launch agribusinesses on the strength of abundant cash, such as building vegetable factories or acquiring vast farmlands in Hokkaido, the northernmost prefecture. And this trend further encourages parallel thinking between the commercial-industrial and agricultural sectors.

Of course, there are those who call for trade liberalization within the commercial-industrial sector. There is also concern that any careless comment giving off the impression of being less than enthusiastic about liberalization might invite suspicion from the general public that the commercial-industrial sector has become spineless. This is preventing the commercial-industrial sector from articulating its stance on trade liberalization. Its safest strategy is to refrain from becoming actively involved in trade policy and, when confronted by a microphone, to pass the buck to the agricultural sector, blaming opposition from that sector for the lack of progress on liberalization.

In effect, the commercial-industrial sector has become passive on the subject. This is tantamount to turning its back on the issue and risks causing a further contraction in the Japanese economy. During the Uruguay Round talks, the agricultural sector was vociferous in its opposition to trade liberalization, which made the equation simple enough. Today, the hazy maneuverings of the commercial-industrial sector has made the issue that much more complicated to resolve.

The writer is Professor of Economics at Meiji Gakuin University.
The English-Speaking Union of Japan

神門善久 / 明治学院大学教授

2011年 9月 7日










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English Speaking Union of Japan > Japan in Their Own Words (JITOW) > Japan's Commercial-Industrial Sector Poses Greater Obstacle to Trade Liberalization than the Agricultural Sector