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GTAP Resource #1228

"Japan’s FTA Policy and Support to Agricultural Sectors"
by Nakajima, Tomoyoshi

Traditionally, Japan has assigned the highest priority in its trade policy to multilateral cooperation through the GATT and WTO frameworks, in order to reduce tariffs and other trade barriers. However, the tide of regional economic integration, including various free trade agreements (FTA) throughout the world, was stronger in the 1990s. It has become more difficult for Japan to protect its interests in the field of international trade by means of the WTO system alone.
There has been an obvious change in trade policy in the last few years. Japan’s first FTA, with Singapore, which was named the Japan-Singapore Economic Partnership Agreement (JSEPA), came into effect in 2002, while official negotiations with Mexico have reached their final stages. A joint research group that includes government officials, business leaders and academics was established in 2002, to investigate the possibility of establishing a Japan-Korea FTA. We can say that FTAs have now become an essential part of Japan’s trade policy.
Japan will have more potential FTA partners in the second stage. Japan has agreed with ASEAN to begin negotiations on an FTA in 2003. China has also made an approach to Japan about the possibility of a trilateral FTA among three of the Northeast Asian countries: Japan, China and the ROK. In these future negotiations, issues relating to agricultural products will be a crucial point. The abolition of tariffs and other import barriers on agricultural products are not included in JSEPA, having been left aside as matters to be handled in the new round of WTO talks. However, it is not realistic to expect that potential partners such as ASEAN and China will accept such conditions in an FTA with Japan.
Therefore, to make an FTA with these countries possible and maintain a certain level of income for domestic producers in agricultural sectors, it is necessary to introduce a new support policy that replaces tariffs and other boundary barriers. Direct income subsidies to producers – a so-called “decoupling policy” – are known to be a method that minimizes the distortion of markets. Here, we analyze the economic effect of the introduction of direct income subsidies to agricultural sectors in Japan, in the cases of FTAs being concluded between Japan and some East Asian countries. With regard to the method of analysis, we have applied the CGE model maintained by the GTAP 5 database.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
2003 Conference Paper
Status: Published
By/In: Presented at the 6th Annual Conference on Global Economic Analysis, The Hague, The Netherlands
Date: 2003
Created: Nakajima, T. (4/27/2003)
Updated: Bacou, M. (9/27/2003)
Visits: 2,317
- Agricultural policies
- Asia (East)

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