Trade
Challenges in boosting Japan’s agricultural exports
Author: Hironori Sasada, Hokkaido University
The Suga administration recently submitted a bill to revise Japan’s Act on Special Measures to Facilitate Investment in Agricultural Corporations. The bill aims to expand the recipients of investments from special agricultural funds, or limited liability partnerships consisting of financial institutions specialised in financing agricultural businesses. Special agricultural funds are currently only permitted to invest in agricultural sector, but the revision would allow investments in the fishing, forestry and food-processing sectors.
By making greater financial resources available to producers and exporters of agricultural and food products, the Japanese government aims to expand agricultural exports from 922.3 billion yen (US$8.5 billion) in 2020 to 2 trillion yen (US$18.5 billion) by 2025, and 5 trillion (US$46.1 billion) by 2030. The revision is expected to play a significant role in helping to promote exports given the large investments that are needed in infrastructure systems, overseas marketing and advertising, and human resources development.
The promotion of agricultural exports — nicknamed seme no nosei, or ‘proactive agricultural policy’ — has become an important element of Japan’s economic growth strategy. This is in sharp contrast with Japan’s old protectionist policies in the past.
Japan is negotiating with other countries to remove or relax trade barriers and regulations on agricultural products. It is promoting Japanese food product sales by hosting business fairs overseas. Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) established a new agency in 2017, the Japan Food Product Overseas Promotion Center, for overseas sales promotion and branding of Japanese food products. MAFF also started the Global Foodstuff Export Project in 2018, which provides business consulting to producers and exporters. Third, the government provides financial support to producers and exporters to invest in infrastructure systems for exporting their products.
Thanks to such measures, Japan has achieved its goal, set in 2005, to increase agricultural exports from 300 billion yen (US$2.8 billion) to 1 trillion yen (US$9.2 billion) by 2025 almost five years early. Japan’s agricultural exports grew faster than expected, particularly over the last 10 years, thanks to growing global demand for food products and the rising popularity of Japanese food overseas. But still, the growth rate has slowed in the last three years.
Japan faces a number of challenges in continuing to grow its exports of agricultural products beyond the need for investment and proactive government promotion. As such the government will need to take action in following areas.
First, Japanese agricultural products lack price competitiveness in the global market due to high production costs. For example, despite the different rice grain varieties, the average wholesale price of rice in Japan was five times higher than that in Thailand in 2020. Japan can address domestic efforts to suppress rice supply to increase its value through subsidies as well as measures to encourage rice farmers to produce alternative crops.
Second, Japan’s target markets have various trade barriers to food imports, including tariffs, health and safety regulations and other non-tariff barriers — particularly in developing countries. For example, China requires foreign rice to be sterilised in fumigation facilities before shipping. There are only seven facilities of this kind throughout Japan and building more would be costly. While the Suga administration’s law revision would certainly help in this regard, Japan should also negotiate with China to lift such regulations in the future.
Third, violations of intellectual property rights overseas threaten Japanese producers. South Korea exports some plant varieties originally developed in Japan without permission, including strawberries, grapes and sweet potatoes. Sales of these items translate into lost opportunities for Japanese farmers and a reduction in Japanese sales.
Fourth, many countries banned Japanese food imports after the Fukushima nuclear accident in 2011. Though most countries have since lifted the import ban, some Asian countries, such as China and South Korea, still have restrictions on food imports from Fukushima and neighbouring prefectures. The Japanese government should continue to make available scientific data to demonstrate the safety of food products and show these countries that wholesale bans are unnecessary.
Fifth, although…
Trade
Self-Reliance and Openness: Core Principles of China’s Third Plenary Session
The Third Plenum communique from the CCP indicates a prioritization of stability and compromise in response to China’s economic challenges. It highlights the concept of Chinese-style modernization and establishes political guidelines for balancing regulation and market forces.
The CCP’s Third Plenum communique signals a focus on stability and compromise in the face of China’s economic challenges. It emphasises Chinese-style modernisation and sets political directions for balancing regulation and market forces. While not as groundbreaking as previous plenums, it acknowledges the importance of market mechanisms and technological self-reliance, aiming to address issues like high youth unemployment and private sector uncertainty. The communique seeks to navigate the complexities of global competition and domestic innovation, potentially reshaping global supply chains and trade dynamics. Overall, it presents a pragmatic blueprint for China’s economic future.
Source : Self-reliance and openness central pillars of China’s Third Plenum | East Asia Forum
Trade
Trade Prevails Over Political Persuasions in China-Germany Relations
China and Germany maintain a strong bilateral relationship, rooted in economic cooperation despite ideological differences. Recent visits and agreements focus on expanding trade and addressing mutual concerns, navigating challenges while nurturing ties.
Evolving Bilateral Ties
China and Germany share a strong bilateral relationship, rooted in history since 1972. This connection has seen moments of cooperation intertwined with periods of tension. German Chancellor Olaf Scholz’s April 2024 visit underscores Germany’s commitment to fostering this partnership, reflecting a mutual interest in maintaining economic ties despite ideological differences.
Economic Pragmatism
As the second and third largest global economies, China and Germany’s economic interdependence is crucial. Germany emerged as China’s primary trading partner in 2023, with trade values reaching €254.4 billion (US$280 billion). In response to global scrutiny, Germany has taken a balanced approach, emphasizing economic stability over political discord. This was evident during Scholz’s prior visit in November 2022, where his diplomatic tone contrasted with broader EU sentiments.
Facing Challenges Together
Despite increasing public skepticism in Germany regarding China’s global influence and human rights issues, both nations continue to seek common ground. Their October 2023 Joint Statement highlights intentions to pursue cooperation in areas like carbon neutrality and open markets. To navigate these complex terrains, Germany can utilize its institutional frameworks to enhance dialogue, while also considering supply chain diversification to reduce dependency on China. The intertwining nature of their economies suggests that, despite challenges, both countries will continue to prioritize their substantial trade relations.
Source : Trade trumps political persuasions in China–Germany relations
Trade
Fixing fragmentation in the settlement of international trade disputes
Fragmentation in global trade due to the lack of development in multilateral trade rules at the WTO has led to an increase in FTAs. The Appellate Body impasse has further exacerbated fragmentation, requiring a multilateral approach for reform.
Fragmentation in Global Trade
Fragmentation in global trade is not new. With the slow development of multilateral trade rules at the World Trade Organization (WTO), governments have turned to free trade agreements (FTAs). As of 2023, almost 600 bilateral and regional trade agreements have been notified to the WTO, leading to growing fragmentation in trade rules, business activities, and international relations. But until recently, trade dispute settlements have predominantly remained within the WTO.
Challenges with WTO Dispute Settlement
The demise of the Appellate Body increased fragmentation in both the interpretation and enforcement of trade law. A small number of WTO Members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution, but in its current form, it cannot properly address fragmentation. Since its creation in 2020, the MPIA has only attracted 26 parties, and its rulings have not been consistent with previous decisions made by the Appellate Body, rendering WTO case law increasingly fragmented.
The Path Forward for Global Trade
Maintaining the integrity and predictability of the global trading system while reducing fragmentation requires restoring the WTO’s authority. At the 12th WTO Ministerial Conference in 2022, governments agreed to re-establish a functional dispute settlement system by 2024. Reaching a consensus will be difficult, and negotiations will take time. A critical mass-based, open plurilateral approach provides a viable alternative way to reform the appellate mechanism, as WTO Members are committed to reforming the dispute settlement system.
Source : Fixing fragmentation in the settlement of international trade disputes
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