Yoichi Tashiro, professor of agricultural economics at Otsuma Women’s University
The American Chamber of Commerce in Japan has released this year’s report on mutual aid societies, or kyosai. The ACCJ has long been attacking kyosai, but in 2014, the chamber focused on the Japan agricultural co-operatives (JA) group’s credit business, proposing that it be put under the supervision of the Financial Services Agency. The chamber said it will work with the Japanese government and the Regulatory Reform Council to support such “reform.”
The chamber’s proposal of achieving a level playing field between farm co-ops and financial institutions regulated by the Financial Services Agency has been realized through the revised law which obligates primary co-ops to be audited by certified public accountants regulated by the agency. In response, the chamber this year resumed its focus on kyosai business, calling for kyosai to be regulated under the Financial Services Agency, receive equivalent treatment as foreign and other insurance companies under Japan’s laws and regulations and be subject to the same taxes, including corporate income tax, as other insurers.
According to Saga University’s Prof. Masaru Shinagawa, after the United States and South Korea signed a free trade agreement, South Korean agricultural co-ops’ insurance business was put under the regulation of the Financial Services Commission, and both the life and nonlife insurance businesses were turned into a corporation in the form of a subsidiary of a financial holding company. Primary co-ops now function as agents and are banned from selling insurance products outside their stores. The situation in South Korea clearly indicates what will happen in Japan if the Japanese government adopts the ACCJ’s proposal of putting agricultural co-ops’ kyosai business under the supervision of the Financial Services Agency.
The pressure is likely to increase if the Trans-Pacific Partnership free-trade agreement takes effect, as its investor-state dispute settlement mechanism allows multinational corporations to sue governments to overrule their regulations. This means there is a possibility that American and Japanese insurance firms join hands to push through their demands.
(Feb. 24, 2016)