A group of anti-TPP professors announced on Wednesday, July 17, that if the government abolishes tariffs on agricultural products as discussed under the Trans-Pacific Partnership free-trade talks, domestic production in the agricultural and related sectors is estimated to drop by 11.7 trillion yen.
According to Eiji Doi, professor emeritus at Shizuoka University who conducted the calculations, the group’s estimates are based on the government estimate that farming output is likely to drop by 3 trillion yen, but they also include impacts on related industries such as transportation and food processing which are predicted to suffer nearly three times as much damage as the agricultural sector.
As a result, the group estimated that incomes of farmers, companies and employees together will decrease 1.8 trillion yen, even taking into consideration the fact that the inflow of cheap agricultural products from abroad would reduce household cost burdens.
The group estimated the impact of tariff cuts according to each prefecture, giving priority to the prefecture’s own estimate if there is one. The group did not include in the estimates possible increase in Japan’s auto exports to the United States, as the two countries agreed on a moratorium in the preliminary negotiations held prior to Japan’s entry in the TPP talks to phase out tariff on U.S. imports of Japanese cars over a long period of time.
The group said that out of the 11.7 trillion yen drop in production, 6.4 trillion yen will be the decline affected by a drop in agricultural production within the prefecture, and 5.3 trillion yen affected by a drop in farming output in other prefectures. The impact of production drops in other prefectures was especially large for food product firms, as they procure raw materials within a broad supply chain in and out of the prefecture they are located.
In terms of prefecture, Hokkaido is estimated to suffer the biggest loss, with a production drop of 1.4 trillion yen including related industries, followed by 1.1 trillion yen for Tokyo and more than 400 billion yen each for Hyogo, Aichi and Chiba.
The impact would be particularly severe in metropolitan areas, where many firms in such related industries as food, fertilizers and agricultural chemicals production are located. The drop in production in the areas would be spurred also by shrinking household income.
The group said tariff eliminations would lead to 4.3 trillion yen fall in incomes of farmers, companies and employees put together. Meanwhile, the estimated reduction in household cost burdens due to inflow of cheap imports would be 2.5 trillion yen, not enough to cover up the loss in production.
The group estimated that incomes would decrease in almost all the prefectures.
(July 18, 2013)