Many thanks to Rick for another insightful post on Japan's political economy. His points regarding the role of Japan's political structure in preventing free trade deals seems largely on target, especially the inability of the Foreign Ministry to effectively lead these talks in all sectors under negotiation. His point about malapportionment is also largely correct, although I would note that malapportionment in the case of the US Senate, the French upper house, and several other national legislatures shows an even stronger bias toward agricultural/rural interests than is evident in the case of the Japanese Upper House (which far less power than the US Senate in any case). However, Rick and I have exchanged views about this issue before.

What I really want to focus on here is an issue Rick did not raise, but one that while it might not matter as much for the proposed TPP is nonetheless a very big issue in other free trade talks, namely Japan's intransparent non-tariff trade barriers. A legacy of Japan being stripped of tariff autonomy during the unequal treaty period, Japan has traditionally relied upon non-tariff barriers more than tariff barriers compared with other nations. This served Japan well during the period of unequal treaties, and perhaps also during the era of GATT and WTO global trade liberalization talks, talks that mostly focused on tariffs, and lacked the ability to focus effectively on non-tariff barriers. However, in the age of FTAs, what had been an advantage, at least in a protectionist's eyes, now becomes a real handicap for Japan.

One area where I have seen this first hand is in Japan-EU talks. The two sides are now starting negotiations for a new agreement to replace the 2001 Japan-EU Ten Year Action Plan that expires in 2011 and is the fundamental document covering all aspects of the relationship. As part of this process Japan is extremely eager to begin negotiations for an FTA. Japanese industry is very worried about the impact of the recently concluded ROK-EU FTA. Some studies show that Japanese and Korean manufactures now mostly compete on price rather than technology, and as such the tariff advantages Korean firms are gaining could significantly hurt Japanese businesses in Europe. In a public forum in Brussels last February, and at other events co-sponsored by the European Japan Advanced Research Network (EJARN), it became evident that the EU side is reluctant to move forward, largely due to vocal opposition from various European businesses. Although some studies suggest the EU would also gain from an FTA with Japan, it is hard for European firms to have any clear expectation of gain: while the EU protects its markets with tariffs Japanese tariffs are already very low, and the barriers are essentially all non-tariff in nature. As such, they are intransparent, often hard to change, with compliance even harder to monitor.

At the public forum in Brussels for example, a representative of a European association of supermarket retailers claimed that many food additives that the IFO recognizes as perfectly safe for human consumption are nonetheless banned in Japan, and without, in this person's account, "any scientific basis." That means when European supermarkets move into Japan many of the products they sell in Europe cannot legally be sold in Japan. So an FTA with the EU could require massive changes in Japan's food safety laws. Also, some municipalities in Japan use their control over licensing large scale stores to keep out new entrants, so messy issues of local governance might need to be addressed as well. At another public forum European automobile industry representatives also expressed opposition to a proposed FTA based upon the barriers they face doing business in Europe.

In short, while agriculture is a significant factor holding back Japanese participation in FTAs, as Rick rightly notes, it is not the only factor. The legacy of non-tariff barrier protection persists in services and even in some manufacturing sectors. This is not only, or perhaps mostly a problem of domestic politics, at least outside of agriculture. This is also a problem of credible commitment: how does Japan credibly show that is is and can remove barriers restricting trade? The EU and Japan are starting some pilot projects, but Japan will have a hard time achieving credibility on this score.

Best,

Paul Midford

Associate Professor
Department of Political Science and Sociology Norwegian University of Science and Technology

July 2010-July 2011, Visiting Scholar, Faculty of Law, Doshisha University