Safeguard
Use
Rice Imports
Beef Imports
Phytosanitary Restrictions
Labeling and Food Safety Issues
Organic Certification
Life Sciences Research
Demographic Change
Safeguard Use
Safeguards are actions to raise tariffs or limit import
quantities for prescribed periods of time, in response
to increased volumes
or decreased prices in domestic markets when imports are
increasing. Japan's government has access to three different
safeguard
mechanisms through the World Trade Organization (WTO). The first
is based on the Uruguay Round (UR) Agreement on Safeguards
and was
used for the first time in agriculture on Japan's imports of Welsh
onions, shiitake mushrooms, and certain reeds in 2001.
The Agreement
on Safeguards applies to all commodities, not just agricultural
commodities.
A second mechanism is available through the UR Agreement on Agriculture
and is available only for commodities in which Japan's UR commitment
involved converting a nontariff barrier to a tariff or tariff-rate
quota (TRQ). Japan and other countries use these safeguards extensively,
notifying the WTO at the time the safeguard is first imposed and
in annual summary reports.
A third mechanism was specially negotiated in the UR by Japan for
pork and beef imports. This safeguard has been used more often for
pork (in which the standard import price, a minimum import price,
is raised) than for beef. Further detail on the safeguard used for
pork is available in Pork
Policies in Japan and a publication from USDA's Foreign Agricultural
Service, Japan's
Safeguard on Pork Imports Re-Implemented—Imports Likely to
Diminish (2002).
In 2003, Japan applied this safeguard to fresh and chilled beef
imports, raising the tariff from 38.5 to 50.0 percent from August
1, 2003, through March 31, 2004.
Rice Imports
Japan delayed liberalizing trade in rice for many years after it
gave up its balance-of-payments justification for trade barriers
in 1963. Instead, it reserved the right to import rice to Japan's
Ministry of Agriculture, Forestry, and Fisheries (MAFF). Okinawa
sake (rice wine) brewers were permitted to import relatively small
quantities of rice, an arrangement made as part of the transfer
of control of Okinawa from the United States to Japan in 1971. With
the exception of 1994, following an extraordinarily poor rice harvest
in 1993, Japan did not import large quantities of rice.
In the Uruguay Round, Japan successfully negotiated an exemption
from trade liberalization for rice. However, as part of the agreement,
Japan was obliged to open a minimum-access quota in 1995 equivalent
to 4 percent of its consumption in the 1986-88 UR base period, and
then expand the size of the quota until, in 2000, it reached the
equivalent of 8 percent of base-period consumption. No imports over
the quota were permitted, and the quota was to be administered by
MAFF's Food Agency (subsequently replaced by the Food Department
in MAFF).
By 1999, the annual expansion of the minimum-access quota had led
to unwelcome large stocks, as the imported rice was stockpiled rather
than released to private markets. Japan used an escape clause in
the UR Agreement to change its import regime to a TRQ, which enabled
it to avoid the obligation to expand the size of its import quota
by the final amount, due in 2000. The quota remains at 682,000 metric
tons, equivalent to 7.2 percent of base-period consumption. The
operation of the quota otherwise remained as before. However, the
"tariffication," or liberalization, of the import regime
allowed imports outside the quota. The over-quota tariff, 450 yen/kilogram,
is so high that, in practice, imports are not feasible. For more
information, see Rice
Tariffication in Japan (April 1999).
Japan uses two mechanisms to purchase rice within the quota: imports
commissioned by the Food Department, and a Simultaneous-Buy-Sell
portion of the quota, which allows commercial buyers and sellers
to jointly work out a bid to take part of the quota. More information
is available in Rice
Sector Policies in Japan (March 2003) and in periodic Attaché Reports by USDA's Foreign
Agricultural Service.
Beef Imports
Japan's beef trade was liberalized in 1991, when the quota was
abolished according to the 1988 Beef-Citrus
agreements between Japan, the United States, and other beef-exporting
countries (see U.S.-Japan Agreements on Beef Imports: A Case of Successful Bilateral Negotiations, November 1998). In the Uruguay Round (1995), Japan agreed to lower
its
beef import tariff from 50.0 percent to 38.5 percent over the period
1995-2000. Since then, beef consumption and trade have been volatile,
while domestic production has remained roughly stable. After reaching
a peak in 1995, beef consumption has been affected by food safety
concerns, which first arose from a series of highly publicized
outbreaks of human infections with the dangerous bacterium strain
E. coli O157 in the mid-1990s.
The discovery of bovine spongiform encephalopathy (BSE, or mad
cow disease) in cattle in Japan in 2001 triggered more fear
about
beef consumption, and caused beef imports in 2002 to be 36 percent
below imports in 2000, the last year before BSE was discovered.
A further shock came at the end of 2003, when a single cow in Washington
State was discovered to have BSE. Japan banned imports of U.S.
beef
on December 24, 2003. Bilateral discussions between the United
States and Japan have sought to develop mutually acceptable
measures that
would allow the trade to resume. Since Canadian beef was banned
after discovery of one case in Alberta earlier in 2003, only
Australia
and New Zealand, among major beef-exporting nations, were allowed
to export to Japan. Trade in 2004 fell 31 percent below year-earlier
levels, affecting consumption in Japan, which normally receives
over 60 percent of its beefs from imports. Trade
recovered slightly in 2005. Market
Context for BSE provides
more information on BSE issues and developments.
Late in 2005, Japan agreed to reopen beef trade from the United
States and Canada, but only allowing imports of beef
from cattle slaughtered at less than 21 months of age.
Imports from the United States were suspended in January 2006
because of the inclusion of a spinal column in a shipment of
veal, and resumed in August 2006. Bovine-product imports from
Canada have remained small. An
Economic Chronology of Bovine Spongiform Encephalopathy
in North America (June 2006) provides a record
of important events.
Japan: Imports of Bovine Products |
Calendar year |
2000 |
2001 |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
|
1,000 metric tons |
Chilled beef |
356 |
331 |
234 |
270 |
208 |
230
|
223 |
216 |
Frozen beef |
363 |
344 |
252 |
306 |
224 |
230
|
237 |
258 |
Beef offals |
117 |
105 |
75 |
97 |
27 |
28
|
29 |
34 |
Tongues, frozen |
45 |
41 |
34 |
36 |
11 |
10
|
12 |
12 |
Livers, frozen |
6 |
5 |
2 |
4 |
2 |
2
|
2 |
2 |
Other |
67 |
59 |
40 |
56 |
14 |
16
|
16 |
20 |
Beef preparations |
21 |
21 |
9 |
15 |
16 |
24
|
19 |
13 |
Total |
858 |
801 |
571 |
688 |
475 |
512
|
509 |
521 |
Source: World Trade Atlas, using
official Japan trade data. |
Japan used its unique safeguard
provisions
for beef in 1996, when frozen beef imports were rising quickly
enough to trigger the imposition of the safeguard from August
1, 1996,
through March 31, 1997, raising the frozen-beef tariff from 46.2
percent before the safeguard to 50.0 percent while the safeguard
was in effect. The safeguard on fresh/chilled beef was triggered
in 2003, and the tariff rose from 38.5 percent to 50.0 percent.
Japan used the 2003 safeguard not because of consistent growth
in trade, but because trade in 2002 and 2003 was rebounding
after the
sharp drop in 2001 caused by the BSE outbreak. The beef safeguard
is triggered when imports rise by 17 percent over a corresponding
period in the previous year and is in effect until the end of Japan's
fiscal year (ending March 31) in which the safeguard was triggered.
However, for fiscal year 2006 (April 1, 2006-March
31, 2007), the 2006 Temporary Tariff Measures Law modified
the normal safeguard mechanism, recognizing the unusual market
situation
caused by the BSE trade bans. For fiscal 2006, the base period
for triggering a safeguard action was set as the average of the
imports in
fiscal years
2002-03, when beef imports were higher than in 2005,
which would have been the normal base period. This temporary
adjustment greatly reduced the chance of triggering a safeguard
in 2006. Similar annual modifications were made for fiscal years
2007 and 2008.
Phytosanitary Restrictions
Japan's use of certain phytosanitary restrictions
has been challenged in the WTO as having little or no scientific
justification. In
2003,
the WTO dispute resolution panel found that Japan's restrictions
on planting and handling of apples for export to Japan were not
necessary to prevent the transmission of fire blight into Japan.
After Japan appealed the ruling, an appellate body confirmed that
Japan was in violation of the Sanitary and Phytosanitary (SPS)
Agreement of the WTO, and Japan was requested by the WTO's Dispute
Settlement
Body to bring its rules into compliance with the SPS Agreement.
Full detail on the WTO case on Japan's requirements for imported apples is at Japan—Measures Affecting the Importation of Apples (Dispute DS245). Implications
are discussed in Resolution
of the U.S.-Japan Apple Dispute (October 2005).
In 1997, the WTO examined Japan's requirements
that each variety of a fruit or nut be tested to see whether
strategies to prevent
codling moth importation were successful. The case was settled
by mutual agreement between Japan and the United States that
Japan
would lift the requirement for varietal testing for the affected
products. For more detail, see the WTO website for "Japan:
Measures Affecting Agricultural Products" (DS76, April 1997).
Sanitary measures currently being challenged include Japan's use
of fumigation when cosmopolitan pests are detected in a shipment.
Cosmopolitan pests are those pests already established in Japan,
so their presence in a shipment does not introduce a new pest.
Labeling and Food Safety Issues
Japan is moving fast to increase the amount of labeling on foods
and the information on labels. As of April 1, 2000, fresh foods—including
fruits, vegetables, meat, and seafood—were required to be labeled
with the place of origin. In the case of imports, this means country
of origin, and for domestic products, it means the prefecture of
origin. The requirement was extended to ingredients of pickled foods
on April 1, 2002.
Smart labels (radio-frequency identification tags) with embedded
semiconductors are replacing bar codes. In 2005, smart
labels began to be attached to all pieces of meat processed from
domestic cattle. The labels enable consumers to access details
about
the cow, farm, processing plant, and processes behind a particular
piece of meat from home computers or in-store devices. Measures
to ensure cattle traceability from the farm to the slaughterhouse
took effect on December 1, 2003.
The Ministry of Agriculture, Forestry, and Fisheries and the Food
Safety Commission assess environmental and food safety attributes
before a food or beverage containing a genetically modified organism
(GMO) can be imported into Japan. As of March 2006, 75 GMOs were
approved for use in foods in Japan. Since April 2001, the Ministry
of Health, Labor, and Welfare (MHLW) has been monitoring and testing
food imports to see if they contain unapproved GMOs. Labeling on
foods derived from genetically modified plants is required if
there
is any genetic change detectable in the food. For example, if products
are made from a batch of soybeans that contains more than 5 percent
of genetically modified soybeans, then the label must indicate
that the soybeans used include some GMOs. This requirement
applies to tofu, soy sauce, natto, soy milk, etc. However, it does
not apply to soy oil or to soy meal.
The MHLW also monitors food imports for maximum residue levels
from pesticides and food additives. Such monitoring became much
stricter in 2002, and some reports of residue levels in imports
from China alarmed the public. Japan instituted
a positive list of pesticides in May 2006—pesticides not on
the list are not permitted on foods entering Japan (see GAIN
report JA6004, February 2006).
Economics of Food Labeling
(January 2001) explains the costs and benefits associated with labeling and examines
proposals for mandatory labeling.
Organic Certification
Organic production and sales of organic produce
rose throughout the 1990s from a small base. In the past, some
Japanese farmers
labeled
their output as organic even if that only meant reduced chemical
use. In 2001, Japan revised its organic definitions so that they
roughly correspond to the U.S. definitions implemented in 2002.
Many farmers had to give up their organic claims. This tightening
of regulations that initially hurt sizable numbers of farmers is
notable as a case of regulatory discipline (without compensation)
that has traditionally been hard to achieve in Japan because of
political intervention.
Foreign producers are eligible to apply for organic certification
under Japan's standards, and many have succeeded in being certified.
Nevertheless, the cost of being certified may be significant.
The ERS website contains a briefing room on Organic
Agriculture with information about Organic
Certification Issues and market developments.
Life Sciences Research
Japan has historically invested in biotechnology research for
pharmaceutical applications and to improve productivity and
efficiency in agriculture.
Programs focus on dairy, beef, rice, and tobacco, but research
also extends to a number of other commodities. Japan appears
to be in
the forefront of introducing commercial meat production based on
cloning technology. Large-scale research continues on the genome
for japonica rice (in collaboration with researchers in China,
the United States, South Korea, and the United Kingdom).
The ERS Agricultural
Biotechnology
briefing room provides an economic perspective on the development
and adoption of biotechnology.
Demographic Change
Japan is undergoing profound changes as a result
of its aging population. Agriculture is affected in a number
of ways. The farm
workforce
is aging rapidly, forcing adjustment in Japan's small-scale farm
structure (see Japan's
Food Producers). Japan's rural areas in general are aging
faster than the cities, and the population declined in most
of Japan's
prefectures during the 1990s, hollowing out rural communities
that have supported farm households in the past.
Japan's consumers are also aging. Recent research has shown
that age affects the country's food consumption patterns. Cohorts
of
people of the same age have similar patterns of food consumption
that they maintain throughout their lifespans. The oldest cohorts
in today's Japan consume more fish, less meat, more fresh fruits,
and more sake than younger cohorts. As these cohorts diminish
in
size, consumption of fish, fruits, and sake will be negatively
affected. Also, as individuals age, they often consume a smaller
volume of
food. Finally, in 2005, Japan's statistical agency announced an
absolute decline in Japan's population that year—the
first such decline since World War II. The number of children
being
born has
fallen
to a degree that deaths exceed births.
Population is expected to shrink for a number
of years into the future.
Increasingly, Japan's oldest citizens are being
cared for in daycare centers or in residences for the elderly,
rather than in the homes of their children. Small family sizes
(one or two grown children)
and the increasing tendency for women to work outside the home
have contributed to a greater reliance on social institutions
for the
care of older Japanese. Daycare for small children is also on
the rise. These shifts have increased food use in institutional
settings
at the expense of food use in households.
Changing
Structure of Global Food Consumption and Trade (June
2001) explores the consequences of demographic change
for food consumption. The
Japanese Market for Oranges (March 2008) explores
one commodity market in which demographic changes have
been important.
For more information on issues and analysis concerning
Japan, see the References section.
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