Senior Staff Writer, Masaru Yamada
In the ongoing negotiations for liberalization of farm products under the Trans-Pacific Partnership free-trade talks, the United States is asking Japan to set an annual tax-free import quota for American-grown rice for consumption as staple food. Two decades ago, Japan secretly agreed to guarantee a certain share of U.S. rice in the Japanese market. The decision forced Japan to post substantial losses in the agriculture ministry’s special account, which continue to impose a burden on farmers and the Japanese people. The government should never repeat the same mistake of bowing to U.S. pressure and accepting more import quotas.
In fiscal 1995, Japan started importing tariff-free foreign rice to fulfill its “minimum-access” rice import obligations based on an agreement made under the Uruguay Round of the General Agreement on Tariffs and Trade. The annual amount of imports increased gradually over the years to total 770,000 tons since fiscal 2000. Of that total, U.S. rice amounted to roughly 360,000 tons, or 47 percent. While the ratios of imports from other countries change every year, the U.S. has been guaranteed a “preferential treatment” of maintaining a virtually fixed quota.
The agriculture ministry officially denies there is a guarantee for U.S. rice imports, but U.S. rice has continued to occupy nearly half of total rice imports for nearly 20 years. During the bidding process for minimum-access rice, it is said that the ministry apparently manipulates deals so that U.S. rice ends up obtaining a certain share in the end of every fiscal year.
A former agriculture ministry official who served as the head of the former Food Agency told The Japan Agricultural News that although he had not received reports officially when he was the agency’s director general, he knew that the share of U.S. rice was intentionally kept at a certain level.
The U.S. side was more straightforward about trying to secure a certain market share for U.S. rice in the Japanese market. In 2000, a group of U.S. senators sent a letter to Charlene Barshefsky who was serving as the U.S. Trade Representative at the time, urging her to make Japan commit to keeping the oral agreement made with the U.S. to maintain a 50 percent share for U.S. rice among minimum-access rice.
Mike Espy, who in 1993 reached agreement as Secretary of Agriculture under U.S.-Japan negotiations on minimum-access rice imports, said he believes it is natural for Japan to secure a 50 percent share for U.S. rice. When interviewed by The Japan Agricultural News at his office in Mississippi 10 years after the agreement, Espy pointed out that if Japan failed to keep the promise, the U.S. government would take retaliatory measures.
How are 360,000 tons of annual U.S. rice imports consumed in Japan? According to the agriculture ministry, in recent years, 20,000 to 30,000 tons of U.S. rice are consumed as staple food and 330,000 to 340,000 tons are used for other purposes including processing, livestock feed and relief supplies. Imported rice consumed as staple food is marketed under the simultaneous buy and sell (SBS) system, in which the government manages tenders and acts as a go-between by purchasing imported rice from a pair of importer and wholesaler at one price and then simultaneously selling the rice back to those same companies at a higher price for sale into the domestic market, so that dealers would not suffer losses. However, the rest of imported rice is sold under direct government tenders where the ministry buys at higher prices and sells at lower prices, thus posting deficits.
The biggest problem lies in the fact that the ministry must buy U.S.-made medium-grain rice at JPY87,000 per ton, 85 percent higher than the major Thai-made rice which is purchased at JPY40,000 per ton. The rice is then sold at lower prices to be used for livestock feed, and the ministry is left with large amount of losses.
The ministry does not disclose the specific use of minimum-access rice according to its country of origin, but if all the 340,000 tons of U.S.-made rice used for purposes other than consumption as staple food are replaced with Thai rice which is priced at JPY40,000 lower per ton, the ministry could have saved more than JPY10 billion in a year.
The account for minimum-access rice has been in the red every year since fiscal 2002. The ministry data shows the amount of loss has accumulated to total JPY277.8 billion by fiscal 2013. It is clear that guaranteeing a market share for U.S. rice is the main factor behind the expansion of deficits.
Japan’s secretly agreed preferential treatment of U.S. rice has resulted in great damage for the Japanese people. We cannot allow the government to remain silent on its past mistakes and set another non-tariff rice import quota for the U.S.
(Feb. 10, 2015)