WTO Failure Relief for Japan

YASUSHI AZUMA / Japan Today 16sep03

The collapse of a crucial World Trade Organization (WTO) meeting in Cancun on Sunday clouded prospects for crafting a global trading framework under the trade body.

But the breakdown also saved Japan from being forced to take tougher farm-liberalization measures such as significant tariff cuts for politically sensitive rice.

The Cancun ministerial meeting collapsed mainly due to sharp disagreements between rich and poor nations over agriculture and new trading rules.

If differences over these issues had been narrowed by the end of the five-day meeting, the ministers from 146 WTO economies would have adopted a ministerial declaration containing tougher farm liberalization measures for Japan, including a proposal for capping agricultural tariffs or expanding import quotas.

Throughout the session in Cancun, Japan struggled to remove the proposal from a final text but it had become almost impossible for other WTO members to accept the Japanese demand by the end of the fourth day, conference sources said.

Agricultural products, particularly rice, are highly protected in Japan as many governing party lawmakers depend on farmers for votes.

From the viewpoint of protecting domestic farmers from low-tariff imports, the WTO's failure may have become a temporary relief for Japanese negotiators.

But given the WTO's agreement to resume talks at a senior level by mid-December, tough discussion looms ahead for Japan.

The European Union (EU) is willing to continue the current Doha Round of multilateral trade negotiations.

"We will not play the blame game and we will remain open to reviving this process," EU Trade Commissioner Pascal Lamy told a news conference.

Japan is certain to face an uphill battle as the WTO members apparently agreed to remain committed to the accords made until the meeting's breakdown.

A short statement released by the ministers instead of the originally planned declaration said, "We will bring with us into this new phase (senior-level meetings) all the valuable work that has been done at this conference."

"In those areas where we have reached a high level of convergence on texts, we undertake to maintain the convergence while working for an acceptable overall outcome," the statement added.

In the course of discussions from mid-December, Japan and other WTO economies opposing drastic farm trade liberalization may be allowed special treatment in the application of the proposal for mandatory expansion of import quotas by switching products subject to such quotas from rice to other products.

But choosing substitute farm products would also be a politically difficult decision.

In Cancun, Japan formed an alliance with nine other WTO economies, including South Korea and Taiwan, seeking to weaken farm-liberalization measures envisioned in the final text.

But other WTO members reacted coolly to the attempt by the 10-member alliance as the group's proposal for removing tariff-rate capping and expansion of import quotas never became a major topic at the meeting.

Japan failed to devise an effective strategy for winning support for its agricultural position from WTO members, particularly from developing countries, which together account for 75% of the 146-member global trade body.

Foreign Minister Yoriko Kawaguchi pledged to work with developing countries on the trade front as the country has close ties with such nations.

Japan aggressively campaigned for the full-fledged launch of a set of trading rules better known as the Singapore issues — cross-border investment, competition, trade facilitation and government procurements — in order to support Japanese businesses investing in Asia.

Japan, along with the U.S. and the EU, offered a compromise plan on the issues by agreeing to launch negotiations only for two of four areas.

But some developing nations rejected the idea, leading the overall meeting to break down.

Hidehiro Konno, former vice minister for international affairs at the Ministry of Economy, Trade and Industry, who joined the Japanese delegation in the WTO meeting in Qatari capital of Doha in 2001, said Japan would benefit from participation in multinational trade negotiations as its growth and prosperity has largely depended on trade.

source: http://www.japantoday.com/e/?content=comment&id=469 19sep03